Bloomberg Businessweek Weekend - September 9, 2022

of CEOs what to expect from their businesses. Down the final stretch of two. The CEO of price Line gives us a peek at fall travel trends, and the head of Chesapeake Energy provides a pulse check on the global gas market amid this ongoing energy crisis. Meantime, with the US Open wrapping up this weekend, you'll hear the story of how America's biggest tennis tournament nearly left the Big Apple and what it took to keep it here. All

of that to come. We begin with a story from Bloomberg Business Week that you can find online and on the term and all it centers around Silicon Valley heavyweight Peter Teel's growing standoff with the Republican Party. The tech entrepreneur had previously teamed up with Donald Trump to help win GOP Senate nominations for two ex employees. We're talking about j D. Vanson Ohio and Blake Masters in Arizona. Now, both candidates faced challenging general elections against wealth funded Democrats

come November. As their own war chests start to dry up from one hy Teal is suddenly tightening the belts on these campaigns. Bloomberg Senior Markets reporter Katie Grathel and I spoke with Business Week editor Joe Weber and the man who wrote the piece columnists for the magazine, Max Chafkin.

The best here for Teal and I think for a lot of these kind of um pro Trump sort of horror hard right candidacies, was that there was going to be you know, Republican wave election in general, you know, mid term elections, the party that's out of powers is the one that does well. Um and pulling early on in this cycle looked really good for Republicans, really bad for Democrats. Joe Binds prov ratings, you know, they crept up a little bit, but they were very low going

back a couple of months ago. And I think the thought here was that with somebody like Teal is he's going to help push in these kind of neophyte candidates who are extremely you know, ideologically hard right, very much you know, part of his world, and that you know, Mitch McConnell and the Republicans were going to take care of the rest because you gotta figure in an election where Republicans are expected to do well, that that these

Republicans Senate candidates will will sort of be dragged along

with them. But but what's happened is that the environment has shifted, Republicans are getting out fundraised by Democrats, and you have this standoff where Mitch McConnell and his allies are sort of looking at some of these races, races that they thought would be well in hand, seeing that they're close or that Republicans are even behind, and asking, you know, Peter Teal, guy who who put put these candidates in the position that they're in, to kind of

pick up the slack, and Teal so far has said no. So we have this kind of very awkward situation. But the sort of Republican establishment and this kind of like trump best wing, of which Teal is probably the most important donor. I mean you've written a ton about Tell in your book, and of course studied him for years and interviewed so many people around him. How is this

just straight out of a venture capitalist playbook? Yeah? So, I mean Teel's whole thing, and I wrote about this column in the column today is is you know, making very early investments in kind of high risk, high reward startups, right, startups that are likely to fail. He buys in early and then you know, later stage investors are are the ones who kind of make up take it the rest

of the way. So you know, going back to you know, making the first investment in Facebook co founding palat here, but you know a bunch of these kind of like super high risk, high reward situations. And I think there's a way to look at Master's advance that way. Mitch McConnell.

Of course, politics as a different sport than investing, and and from the sort of mainstream Republican view, the feeling is like, look, Peter, tell you stuck us with these candidates that are kind of subpar right there, their inexperience, they've got lots of baggage. They're not necessarily, you know, the most broadly electable candidates, and now here you are. I wanted to finish the job, right, And so they're

they're feeling very much confused, betrayed. Whatever. There's the the upshot of this, if things don't go well in these races is Peter Teele could get blamed for costing Republicans control of the Senate. So in that case it might be a bit of an out for the Republican Party. But you have a great quote in here from an

anonymous person who works in Republican politics. I'm quite puzzled how you'd arrive at a decision to spend thirty million dollars on primaries and zero dollars in a general election. What do we know about Teal's VC playbook that might give us any sort of hint as to if he would start to spend money, what would kind of break the damn there? Well, I think the playbook would be not to spend any money, right, and that's clearly what

he's trying to do now. Of course McConnell, partly because McConnell's under a lot of pressure, right, you have these other races that aren't going well. The money is not unlimited. McConnell's calling his bluff, and I think at some point, you know, I would expect to heal to pony up to some extent, right, go back into his wallet and

donate a little bit of money. But the thing is that if you're a sort of mainstream Republican, the damage is being done every day that that he hasn't done that right, because we are you know, as him said at the top, you know, this is like the home stretch of the election. Um. Every day his candidates are getting out spent on advertising, and the window to kind of turn things around, especially in Arizona, is shrinking. So you gotta think he'll will come to the table um.

But but again he's going to try to limit his financial exposure, try to spend as little as he can, and try to put as much of this on on Mitch McConnell's possible. And you know, I'm curious here, since there are opposing candidates in both of these races, what what are the Democrats doing or is this just implosion on on the GP sid Well, you have a couple of a couple of things. One is in Arizona. Uh,

you have a very well funded incumbent in in Mark Kelly. Um. Uh. He's run a very quiet campaign, but he's raised a ton of money. Um and and as a result, he's he's formidable. UM. Ohio is a little bit different, and I say, from the publican point of view, more disappointing, because you know, Arizona is a state that Joe Biden won. Ohio is the state that Donald Trump won handily. Um. The the current holder of that Senate seat won his seat by twenty points. So the fact that it's it's

even close is kind of amazing. That was Bloomberg Business Week column, Miss Max Chaffkin. He's also the author of the contrarian Peter tile in Silicon Valley's Pursuit of Power. The book is out now. Also joining US Business, we Get ititor Joe Weber and Bloomberg's Katie Greifeld as well. Coming up, why something's still not sitting right for Amazon executives five years after the company spent nearly fourteen billion dollars to buy Whole Foods. You're listening to Bloomberg Business Week.

This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick takes Tim Stinovan from Bloomberg Radio Well in the current issue of Bloomberg business Week magazine Catch it now. It's on news stands online on the terminal of course as well. And then at Bloomberg dot com slash a business Week there's an article about five years on Amazon is still digesting that thirteen point seven billion dollar Whole Foods takeover. The article written by Matt Day.

It's edited by Joshua Brustein. He is with us on the phone right now. Also with us is Joel Weber. He is the editor of Bloomberg business Week. He's with us in the Bloomberg Interactive Broker studio. Katie and I. We're talking about this a few minutes ago. Joel. It was sort of like the where were you when you heard moment? There were so many jokes about getting avocado toast by drone. Yeah, so waiting for that. That's still by the way, that's another good Bloomberg Business Week story

is about that the drones common serializing. But but what's going on with John Mackie, the guy who he's gone all he's gone exactly, So that co founder of Whole Foods UM. Five years ago, Amazon uh went shopping for some produce and ended up with Whole Foods UM. And you know, I think the point of the story is five years on, what was it all about? And that was sort of I think, what what interested Matt and uh, you know what, Josh to just put it to you,

what was it all about? And what does Amazon really have to show for it? Now? Thirteen point seven billion for groceries is more than I usually spent exactly. Um. Yeah, I think both five years ago, both Whole Foods and Amazon needed something. Whole Foods had built itself up into this really big player in the organic grocery market, and then everyone else kind of figured out that they could do the same thing. And so Whole Foods was UM really struggling to figure out what its second act would be.

UM investors were calling for a shake up, and it was just having a lot of trouble in the public markets. Meanwhile, Amazon had really been trying to get into groceries and grocery delivery, and it thought, you know, by this five hundred store chain of grocery stores and really just really power up our own entry into the grocery market. Um. And five years later, it doesn't seem like Whole Foods problems have been solved. Its problems are still mostly the same.

Amazon also has not taken over groceries, despite the fears that it would at that time. And it seems like we're largely kind of where we were and not as much as happened as we would thought. Well, that's what I want to talk about. Five years later, what does it Amazon have to show with this purchase. What is Whole Foods actually added or subtracted from its bottom line? So in terms of its bottom line, the answer is that this is not This is one of the slower

growing parts of Amazon's business. If you look at other other aspects of Amazon's business like cloud, cloud computing and sort of other real revenue drivers, those have been growing faster than the grocery business. Um, and that business is also being Uh, it's not just that groceries are going slower, it's like they're not even growing as fast as competitors. So that just really hasn't taken off. They haven't figured out how to combine these two companies in a way

that helps them compete in the specific market. Okay, so one thing though, that it has done is you know, if you need to return Amazon products or you know, get grocery pickups. There have been some some noteworthy enhancements that either you know, either the mergers helped facilitate or that maybe Amazon shoppers have gotten out of it. So, so what has been on the on the good side here? Yeah, so I think the good side is that you know, Amazon uh does have a large, uh this large network

of physical stores um. As I said, there's about five d um and it has started to lean on Whole Foods the expertise in there to help with Amazon Fresh, which is its other chain of grocery outlets. UM. And we haven't really seen the fruits of that yet so speak, but that could come in the future that you could see if if Amazon Fresh really does mature, um and turn into something really substantial for the company, that a lot of Whole Foods wisdom will have gone into the

building of that product. It's just not quite um there yet. So we mentioned John Mackie. He was the co founder of Whole Foods. UM he's moved on retired as of September one. Who's in charge of Whole Foods within Amazon now? Yeah, so uh he is being taken over by his former CEO, former management consultant UM very kind of uh. Mackew was known as an as an over as as sort of a really big personality UM, whereas his successor is less so. Jason Jason Bush is his name. Yea, yeah, I mean,

I'm I'm sorry. Jason mentioned that UM and his plan is kind of to take Whole Foods back to its roots, as he says, to try to get back to some of like the local produce offerings and doing things that makes Whole Foods kind of not feel like an Amazon honestly, to feel like not you get the same experience everywhere, but you go and you know that your local Whole

Foods has whatever the produces UM you know in your region. Well, Joshua, that's been a big complaint for people who were sort of the die hard Whole Foods people before Amazon purchased the company. If you go back to you know, the

roots of this company. It started in Austin, and it was kind of this like weird alternative grocery store, right and even when it was a publicly traded company, it and it made a ton of acquisitions around the country, it still was unique because it had that local produce and it had that kind of heart to get stuff.

And I'm wondering. It's funny, you know, when this article came out, I saw people tweeting about it who didn't work at Bloomberg, and they were saying, the Whole Foods, the experience of going to Whole Foods has changed too much since Amazon took it on, So you know, I don't go there anymore. Is one of the tweets that that I saw that tweeted out this story. How is Whole Foods physically different because of Amazon? Like what's the

experience like? Now? Yeah, I think there's two things in there that The first that you mentioned about, you know, the Whole Foods really feeling different and sort of losing that local feel is is that was a complaint before the acquisition. And one that I think one of the problems that Whole food had and it certainly hasn't been solved. Um. Hasn't been solved by Amazon, nor would it really Like

that's not Amazon's strength. UM. But to your question about what's physically different, you know, Amazon has has helped re re engineer Whole Foods UH stores a little bit to be UM, you know, more focused on delivery. There's a lot of delivery pickers in the store people mentioned, which I think some people really don't like. You know, You're you're trying to shop and there's someone, you know, they're

like clearly like filling up carts to move along. And they've had to dedicate some some space that used to be cafes and somewhat for the physical infrastructure around the delivery business. So that I think has really changed in some of the stores in ways that um, you know, long standing customers don't necessarily like. That was the Technology

editor of Bloomberg Business Week. Josh Brustein, along with Joe Weber, the editor of the magazine, and Katie Greifeld read the entire story in the Technology section of this week's special double issue. It's available online, It's on news stands and on the Bloomberg Terminal. Still ahead on Bloomberg Business Week, we turn our attention to the energy market and an executive who says his company is poised for growth even

as prices start to come down. We have the leading natural gas portfolio in North America, and what is a market that needs a lot more natural gas? Chesapeake Energy president and CEO Nick de Lasso joins us on the

other side. This is Bloomberg broadcasting from the financial capital of the World, Bloomberg eleven Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one to San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nine team, and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week. Gas prices in the US reached a record high in mid June, topping five dollars a gallon

the Auto Club. Triple A reports that prices have since dropped from those highs, coming in closer now to three dollars and seventy five cents as of the middle of this past week. For an update on supply and demand and on a portfolio that's looking increasingly attractive to investors, Katie Grayfield and I spoke with Nick de Lasso. He's

president and CEO of Chesapeake Energy. He was elevated from CFO back in October one, just eight months after the firm exited Chapter eleven bankruptcy, and he says conditions well they're continuing to improve. Our team is super excited of where we sit in the market today the things we've been able to accomplish. We've completed two outstanding acquisitions to

bolster our inventory in our Haynesville and Marcellus positions. We have the leading natural gas portfolio in North America and what is a market that needs a lot more natural gas? Natural gas has been the story of the energy space over the last year, and chest Beak sits in a

fantastic position to deliver on that well. As part of that focus on natural gas, last month, there was some news that you were planning to exit your Eagle Forward Shale of South Texas investment to double down on natural gas. So I have two questions for you. One is how is that sale going? And the second question is are you looking for one buyer or multiple buyers? Here? Sure? So, we did announced last month that we're going to be pursuing a sale of our Eagleford sail assets. That's really

based on the strength of our natural gas portfolio. We are just getting that process started, so it will take a fair amount of time. Is a really large asset with some great characteristics. We do think that because it is a really large asset across a pretty wide span of geography that they're likely could be more than one buyer for that. So what do you end up doing with the proceeds then, Well, we have the leading return

framework in the industry today. We have a base dividend, we have a variable dividend that is our free cash flow, and we also have a two billion dollar buyback program. The proceeds from this, we see is enhancing that overall return profile that leads the industry. There's this interesting dance or balance that needs to be struck between domestic demands and what we're seeing from overseas and exports. Since how high does does domestics production need to go to strike

that balance? So it doesn't need to go a lot higher, uh, we need to see continued growth in production in the US Today, we've had a big increase in overall demand for natural gas. However, we've also seen continued switching away from coal, which is fantastic for the environment to see the lower carbon resource of natural gas displaced coal. It has a huge impact on the g h G intensity of energy supply in the United States, and we think

there's more to be done there. However, it doesn't take a whole lot to move the market in natural gas. It's a it's a historically volatile commodity. We know that when production increases a bit, it can really change the prices. So we do expect to see natural gas production increase, and we do expect to see prices come down a bit as a result of that. How much do you expect prices to come down? I mean, is the era

of two dollar natural gas? Is that over? You know, we're really optimistic about long term natural gas prices, but today where they sit in the eight nine dollar range over the last month, we do think they should come down a bit from there. You know, historically we did think about natural gas prices settling in and that mid twos range. We do think that floor has moved up considerably from that and it's never again two dollars. Well, I think never again is a hard thing to say.

Gas will be a volatile commodity and it may have dips for short periods of time, but we think that general assumed floor should be in the mid threes or maybe even approaching for and of course it's hard to have this conversation without talking about Europe, where gas prices are going crazy right now. What exposure do you have to those international prices today? We don't have any direct exposure. However, you've seen the prices in the US come up significantly

as prices around the world have have increased. We've talked a lot about l en G and what our resources mean to the supply of len G export out of the US, and we're really well positioned for that. We have a very large position in the Haynesville Shale in Louisiana and we can be a really important supplier of len G to the world. As a result, I think we're all thinking about cybersecurity in the wake of what happened at Colonial Pipeline and other things completely unrelated to

oil and gas. What are you guys doing at Chesapeake to make sure your systems are safe from a cybersecurity perspective. So we partner with a number of different outside firms that help us look at and analyze our systems and make sure that they're resilient against attacks. We track all of the daily thousands of hits that our systems receive. We educate our employees about how to be safe with

their cybersecurity approach, and the risks that exist in the environment. Uh, and so we stay really plugged in on that and we take the threat very seriously. We did talk about the Eagle Forward sale, wondering if you're looking at any sort of acquisitions here. So we've done two acquisitions over the last year. It's given us a tremendous length to our portfolio that we feel great about. We don't need to do anything else on the acquisition side, but we

do believe in scale. We do believe in consolidation in the industry. So if another opportunity comes up that meets what we call our non negotiables, which ensure that we make our company better through acquisitions, not just bigger than we would consider those opportunities in the future. That was Nick de Lasso, President and CEO of Chesapeake Energy, with me and Katie Greifeld coming up next, we're gonna stay in the C suite. We're gonna check in with the

CEO of Priceline. The online travel platform gives us an up close view on how inflation is affecting consumer demand, and it provides some tips for vacationing without breaking your budget. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. Web searches for round trip flights more than double view over year. Hotel searches well not far behind up in

domestic and international. Some of the top spots include San Juan, Honolulu, Houston, and Miami. That's according to our next Guest price Line CEO Brett Keller. So how much will it cost to go to these places? So we talked about energy in our last segment, and well, gas prices have come off their record highs, they are still above normal. Bloomberg's Katie Greifeld and I asked Brett whether he's seen those high

costs starting to impact travel demand. We haven't yet. And there's two I think facts we can point to here. One is that hotel demand through the month of July, you know, public data show that that was very healthy, and I think what we're seeing in August continues to be healthy. You know, the drive market is a big market in the US, and gas prices certainly should play a role in that. I think with gas prices coming down a bit over the last few weeks, that's certainly

going to help labor day. What hasn't really moved down yet is jet fuel prices. Those are still up over where they were last year, and while flight prices aren't

up quite that high. So because because we've seen a decline in the price of oil and as a results, we've seen a decline in the price of regular gas that we used to fill up our cars, do we anticipate that we're also going to see some sort of decline in the price of jet fuel and then in turn airline tickets to Yeah, that's stepped down a little bit. You know, if you look back four or five weeks ago,

jet fuel was up over a hundred percent. So it's come down you know, ten to fifteen percent here in the past few weeks, but it does seem to drag and fall behind its speed of return, uh, compared to you know, gas prices. The consumat're paint at the pump. So I think we've got a little bit of a weight to go there if even if pump prices continue

to drop in the airspace. And so I want to talk about how this compares to what we have seen in one but also pre pandemic levels sort of the demand that you're seeing for flights and hotels for searches. What does it look like? Well, when you look ahead at fall travel, flight searches are significantly on the price line platform versus last year. We're seeing flight searches up over a versus last year for fall travel, and we're

seeing a hotel searches up not quite that much. But now, not all of those consumers are ready to pull this trigger yet right there dealing with sticker shock again as they move into fall. But that does indicate a very very high demand to travel, a demand for travel, and so consumers are very active in the market right now, shopping and looking for value that they can pull the

trigger on. You know, we can't predict the future. We don't know what's going to happen with the economic cycles here, but things are I think shaping up in a good place for the fall as well. Hey what about rental cars right now? They're offered on the price line platform. And I was shocked to find that my brother rented a van to carry his three kids and his whole family a few weeks ago. They did it for ten days, and it was like thirty five dollars bread just to

rent this van. What is going on when it comes to rent our cars. Yeah, rental cars are in a very interesting, uh position right now. You know, coming out of the start of the pandemic, there was a couple of things putting pressure on the car industry. First of all, they had had a number of storms throughout two thousand

nineteen that depleted quite a bit of their inventory. And as they entered into the pandemic, obviously many of the auto manufacturers had supply chain issues and stopped producing cars, and so that put further pressure on their fleets. And so as they downsized their fleet significantly, that caused prices to go up. It really just skyrocket. Last year prices

were up almost sev versus two thousand nineteen. They've come down a little bit, believe it in hot versus last year, but there's still up six Consumers are paying significantly more to rent a car today than a couple of years ago. And then you add high gas prices on that that really puts a dent in the consumer's wallet. But with that said, they are selling out in a lot of markets, so consumers are still smoking these these higher prices. Brett, I gotta tell you, Katie needs a vacation. She's got

plenty of days left. I'm looking at her calendar right here, which we can do at Bloomberg, which is fun, and she has a lot of vacation days left, Katie, that you've got to burn by the end of the year. I've got some vacation days. I've got to burn by the end of the year. Brett. Where are people going? Where are the hot places to fly? Right now? Alright? That is the question we need to answer here. We

need to burn some vacations. So if you know, you look at basically any day of the year, the top destinations are typically the entertainment venue, so that's going to be, you know, topping the charts almost always is going to be Las Vegas, Orlando, New York. But as we started to look at where consumers are searching as we move into the fall, let me share a couple of destinations

for you. Obviously, Puerto Rico, you know, San Juan tops our charts in terms of the most search and a domestic destination at least within or close to the borders of the US. Honolulu ranks number two in that list. Miami, of course, always a hot spot is where people are flocking here in the next couple of months where we are really seeing though searches pick up at a very very high paid It's almost ten times where we were last year. Are of course, international destinations. Things were not

completely shut down last year, but really took travel. You had to test go through a number of hoops to actually get to your destinations. So this year that window has opened back up and we're seeing people really both travel to and search for international destinations. And the top ones on our list at least for the fall so far include destinations like Munich, so people are heading to October Fest that is back on the map again. People are going to destinations like Dublin and London. Other top

destinations include to Amsterdam, Paris, Lisbon. Many of the hot spots that used to be big travel destinations for US consumers are now back in bog again. Okay, Brett, So I actually have vacation days put in for the first week of or rather the second week of October. It's our five year wedding anniversary. We haven't anything. We haven't booked anything. If I'm trying to book international right now,

is it just is it a disaster? Should not even try? Well, it was a rough summer, right the major airports overseas really couldn't handle the pressure in the crowds, and so you heard stories of lines that were forward five hours in length, many people missing flights and rebooking. I think we're past that type of pain when it comes to international travel. We're certainly not dealing with many of the testing protocols and the issues that were associated with COVID.

I think from that perspective, we're in good shape. From the airport and the congestion perspective, it will still be very busy because many of the Europeans are now of course moving around and across countries as well. But things have improved and many of the airports have put limits in place in terms of how many flights allowed to move through their airports. So I think you'll find that it's tolerable enough that you will want to travel to

some of these destinations. It's it's it's you know, these are the kinds of things that if you keep passing up in life, you're just not going to enjoy some of the best travel that the world has to offer. That's a good point. I always think about Warren Miller and the Warren Miller films. If you don't do it this year, you're gonna be one year older when you do. They're always rumors about the best time to buy tickets,

the cheapest days to buy tickets. I know the airlines have it pretty pretty figured out in terms of from an analytics perspective, you know how to get the most money from us. Given that we think prices for fuel will go down as a result of lower oil prices, should we still be booking our holiday travel really earlier? Should we wait for prices to fall? Well, one, I'm not sure that I would ever bet on oil prices falling. They're just as likely to go back up in the future.

But when we look back in history, and this is true virtually every year. If you're booking holiday airfare, those are for the major holidays like Thanksgiving, Christmas, end of Year, etcetera. You need to book early. You need to be booking in this September October time frame. If you're talking about other types of fall travel, you really need to book at least two weeks in advance, and do not wait until the last week to book your flight. You will

absolutely pay up. And it is true if you fly out on a Tuesday, you will save an average of at least eight percent on your ticket, so book in advance. There are certain days a week that will play to your favor and on price line you can do things like mix and match airlines, go out on one airline, come back on another. That typically can lead to savings of you know, almost ten percent if you're careful and

how that how plan. So those types of changes can take off your trip if you're careful and how you plan. The only downside, of course, is that you might be flying out on a Tuesday, which sounds less than ideal. That was Priceline CEO Brett Keller, along with a Bloomberg Senior Markets reporter Katie greifeld. Well. That wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Tim Stenebec ahead in our next hour some of the highlights from our two days on

site at the US Open. They include the story of how the world's largest tennis venue almost never came to be. In a conversation with former U s t A CEO Katrina Adams on diversity in the sport, I tell people that I didn't know that tennis wasn't a black sport until two years in because the programs in the tournament side was playing. There were so many black tennis players that were good and competitive, and so until I came into the USC system. I don't want to say it

was tougher. It was just that because I was good enough to start playing or wanted to continue that it was more challenging because I was the only one. And if you prefer screen time to sports, We've got you covered there too. We're gonna hear from the former CEO of Movie Pass on the latest salvos in the streaming wars, and the next big thing in the entertainment business. This

is Bloomberg. This is Bloomberg Business Week, inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news as it happened. Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovin on Bloomberg Radio. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including on the ground interviews from Queens, as we celebrate the

US Open and the anniversary of Arthur ash Stadium. Just wait until you hear the price tag. This thing was pretty costly. Plus, former movie past CEO Mitch Lowe brings us lessons from decades long career and entertainment and predicts where the metaverse could meet the movie industry. But first up this hour, we dive back into our special double issue of Bloomberg Business Week. It's available online, on newsstands and on the Bloomberg terminal. You may be familiar with

the term dinks. It's an acronym that stands for double income no kids. You know them young couples, both working, no children, and often with a little added disposable income as a result. I am not part of a dink a couple. A story on the economic section the magazine highlights out US women, though, who stay single and don't have kids, are also doing really well financially. Bloomberg News Economics editor Molly Smith is here to explain. Carol Masser and I caught up with Molly on site at the

US Open in Queens. I was really inspired to write this story by many of my friends who lived this lifestyle. They're in their early forties. Uh, some of them are divorced, some never married and have just never really wanted children. That's never been part of their life's vision. And I wanted to just bring some real justice and service to

that topic. I think a lot of women when they say they don't want to have kids, are kind of judged and looked at like, oh, weird, Like why it's almost thought of as like a shameful decision, that what's wrong with you? Right exactly, And they really take pride in this, that this is that's just not the lights that they want and there's nothing wrong with it. And they have advanced in their careers. They own at least one or multiple homes, including including apartments in New York City,

and they're doing amazing personally and professionally. Well, let's talk about a couple of those women that you profile in here. Ashley Marrero is one of them, and an Ad Dixon actually a woman I used to work with earlier in my career. I was surprised to see her picture in this story. What did they tell you about their choices and how it's sort of given them this freedom to kind of drop everything and just go off to Alaska or something exactly. Yeah, and they have a group of

like twenty five friends who are just like this. It's really incredible to see. And for Ashley Um, she was married when she was in her early twenties and I think she just felt very held back by it. There were so many things that she wanted to go out and do but didn't feel like her marriage really gave her that freedom and opportunity to do it, like to get up and do do these trips or go by the beach house. Um with Anna, I think it was this sim idea that just kids were never part of

her plan. She's had a partner for a lot of her life, but it's just not interested in raising children, and it is very happy and resolute in that decision. Well, it was it a case of yes, they thought they would get married, didn't have kids and do that whole thing, and it just didn't work out. Or is it that it wasn't a driving force from the get go, so they thought more about like marriage could be in the picture,

but less so kids. And Ashley even says to this day that if she were to meet somebody and get pregnant tomorrow, that she would have the child. But it just hasn't been something that she's actively pursued on her own, and especially since she's not in a committed relationship right now to like she has her eggs frozen, Is she really going to act on that when there's you know, no one right now who's seriously in the pictures. That's

just not part of her plan. Tim and I talked about with a lot of our gas about equality between women and men, just basic equality in the workforce. And I'm always kind of like, as long as women have kids, they're never gonna have the equality because physically they're going to be out of the workforce. They're going to be looked at differently. Even if they go home for just a week and they go back to work. And I do wonder they really are financially wealthier than maybe if

they had gone a different route with kids. I mean, it's hard to imagine how, how how it wouldn't be right. I mean, Ashley, for her job, is on the road a lot. She's a sales rep for a medical device company, so she's in the o R. She's with patients, traveling around to meet doctors. And she owns a one bedroom in the West Village. But if she had a child, she'd probably need a living help, like, I mean, like to do that on just her income would still definitely

be challenging. The other part of this story, too, has to do with how expensive it is to raise kids. Look at the opportunities that these women have financially because they don't have to put money in a nine, they're not paying for daycare. And it's just in the US, and you write about this, birthrates and are declining and people are having kids later in life. Is there a

lesson in here for policymakers. I mean, it's it's so mind boggling to me about how this like it's just there aren't a systems in place in the US to really support parents. I mean, how much of I'm sure you guys have talked about it, with all of the controversy around the overturning of the road decision, and that the US is like the only wealthy country that doesn't guarantee paid leave to new parents, that it's challenging and it's honestly like for so many people whose jobs don't

afford that, it's it's un really unattainable. I love the kind of subline on this is foregoing marriage and parent and has a bigger payoff for American women than men. So even men who don't get married and have kids, women are finding a bigger payoff. That's right. Yeah. The St. Louis Fed research showed that what single women without children had an average of sixty five tho dollars in nets

in net worth. While it's saying men with our kids, tell us about the response that you've gotten after writing this. I mean I saw Anna share this on LinkedIn and so many comments and likes. It's been overwhelming. I think what's I've really appreciated is the response that Ashley and Hannah have gotten and how many women have reached out to them and said, Hi, I'm at this similar point in my life. I'm trying to come to terms with it. Can I talk to you? And that's really just a

beautiful thing to hear. That was Bloomberg News Economics editor Molly Smith. Check out her full story in the magazine. You're listening to Bloomberg Business Week. We're staying put at the US Open and diving into the origin story of the biggest tennis venue on the planet. We're talking Arthur

Ashe Stadium. After the break, this is the biggest things have happened in New York and at that time Dave Daklins was there and he wanted this stadium, and they will talk about leaving the city because they didn't have a big enough facility to the US Open. I said, I gotta get involved, and I made a couple of goals. That was fortunate, and they retained me my firm, and we spent the next three years getting to put rations.

Who is all about authors? It was sixteen courts than you can't remember forty eight weeks out of a year average people. Junior's scenes are using these best courts in the world, but they needed more room, attorney, said David Off on his role in the quarter billion dollar project. Next stick around, This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinnoby

from Bloomberg Radio. Carol and I were lucky enough to spend a couple of days out in Queens, New York during the early rounds of the U s Open. We conducted our broadcast from the Billy Jean National Tennis Center in Queens. It's just a mecca when it comes to tennis fans. The venue continues to evolve to support the player and fan experience, and it often means renovations and building a new Our next guest understands what that process

entails better than most people out there. We're talking about Sid david Off. He's a founding partner at david Off, Hutcher and Citron l l P. He's also chair of the firm's government relations practice, having worked on major development projects in New York City. He was even an administrative assistant to former New York Mayor John Lindsay for seven years.

We spoke with Sid back on September one. Serena Williams was still in the field at that point and the fans were out in full force with darthur Ash Stadium celebrating its twenty fifth anniversary. We As said, if he could have imagined the tournament he loves and the facilities that he helped create, would ever come close to what

they are today. At that time, Dame Dhinklins was Mayor um and he wanted the stadium that Dave was an incredible tennis enthusiast and really backed young tennis plays, particularly black young tennis plays and UH and they will talk about leaving the city because they didn't have a big enough facility to the US open and um, I said, I gotta get involved, and I made a couple of goals. That was fortunate and they retained me my firm, and we spent the next three years getting the permissions because

it's it's interesting. This is park land and anything that happens in park land requires the community board involvement, this borough president, the city council, the legislature, and the governor. Because you're alienating an alienating park property, it has to go through the state legislature. None of this was here. Well, no, the the just the one right, the really armstrong was there. It was all about Arthur ash Um. They were a

loted with sixteen courts. Now you can't remember forty eight weeks out of the year, average people, juniors, sceniors are using these best courts in the world. But they needed more room. So it was it was a negotiation. It was three years. Part of it is what we're seeing here today. All these people out here were just have day passes. It was required that they would have a minimum day passes for people who can't afford the seats in the stadium. If I can, I'd love to tell

you a story about Arthur Ash. So he had to go to the four community planning boards that UH circle and involved with the Flesher Metal Corona Park and author asked that he wanted to come and convinced them that was the right thing to put this stadium here in this park. And he told the story of him growing up at Richmond, Virginia where he was playing in the public park and he was mentored he would never have been able to be who he was in tennis had

it not been for a public park. And when he won the US Open at the west Side Tennis Center in Forest Hills in sixty seven, he couldn't be a member of that club. So he won the Open at a club that he couldn't be a member of it. And he would tell that story of this kid growing up and anybody who had any doubts that this facility belonged in this park at that ended it it was

incredible And he's such a gentleman. And to be here in the stadium named after him, seeing Serena playing it last night, you know, I gotta tell you it's thrilled. And it is the best deal of any any arena in the country. The money that comes to the city with no expense of the city. I want to make sure understand this. Arthur Ash died in Yeah, so this

was this that's planning for this was that long ago. Yes, it was David Dankles is man from three and it was his like final act that this scientist Antho was out there already suffering but you couldn't tell. But so the question was that I ever think would be like this. I never doubted it would be incredible, that I think would be multi incredible. So you talk about three three years of negotiations three years. What was the most difficult

part of that? I can only imagine because major cities are very protective of their park land space, as they should be, right it is open to all communities and it's just important to have this open space. What was the toughest negotiating point? The toughest, And it was the craziest because there was definitely a group on the board of the U. S t A that didn't think that you New York audience was the forum for the USA talking about Atlanta. Were talking about Chicago certainly not New York.

And you know, they didn't like who sat in the bleaches whatever, whatever. The whatever the reasons were, and they wanted to leave, there were any excuse to leave. So the issue then became the flyovers, the planes that land at the Guadia a stones throw from this a tennis stadium. And I kept saying, we who nobody, this isn't a big issue, but they said, this is a big issue.

So at the time Ald Motto was the United States Senator, he actually held up the appointment of the head of the f A A which the Senate has the right to do, until they agreed that the planes would not fly over during the tournament. And the the interesting thing is that it was a Merrillo election. Giuliani was running aided the stadium, aided Dinkins obviously, and said that this said this a lot of history that said that this, this would this would be a safety factor. Anybody who

flies in those name about planes. When the guy in the tower tells you where to fly, you fly, and and and he and he said, this is going to cost the city money. And the deal was that if there were five uh and incidance in one hour where a plane would fly where it wasn't an emergency, where they not following the rules of the tower, that then there was a fine or an abatement of the rant that it couldn't happen. The US Open brings in a

ton of money in the city, doesn't it. Those assessments I heard was about seven hundred million dollars come in for the two weeks of the Open and the money said point in at the gate, the money that spent at the restaurants, some money that's spent in hotels, u ubis ams, etcetera. UM, the city gets a piece of everything. That was a negotiation and get a piece of the UM television money. The piece of the was that the

negotiation from day one. Yeah, that was part of the deal and that was one of the reasons that you know that held it up a little bit because it was a big money thing. But in you know, it was important to the U. S t a uh how much they gave away, but would a lot of money and it was certainly worth it. Uh. And today looking and it's been said by many looking at any stadium in the country, this is the most profitable to any municipality without a hot any hard money being put in.

That's remarkable because the tournament is two weeks a year exactly. So how did that so it's so much better than football stadiums and other parts of the country. Yes, and if you look at what they pay, they have all their maintenance is taken off like city field, Yankee dam whatever. Of course they take it off your rent. This is a net net least us TA runs it fifty two weeks of the year. They closed it down for the four weeks a week after week after the tournament, week

before week after pay for everything all year round. City gets a piece of everything. Could you ever kind of replicate this? Too much reed in the industry. This is one that's industry. That's said David Off, founding partner at David Off, Hutcher and Citron LLLP. Still to come on Bloomberg Business Week, the former CEO of the u s TA talks about diversity in the sport and how the game has captivated American audiences. You're listening to Bloomberg Business Week.

This is Bloomberg broadcasting from the financial capital of the world, Bloomberg eleve in Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one to San Francisco, Bloomberg nine sixty to the country Sirius XM, Chado one nine team and around the globe, the Bloomberg Business app and Bloomberg Radio dot com. This is Bloomberg Business Week. Well, our next guest has gone from professional tennis player to coach to commentator, and she's now helping the next generation

get there as well. Katrina Adams is the former president, chairman and CEO of the U S t A. It's the U S Tennis Association. She also contributes to CBS Sports Network and is the executive director of the Harlem Junior Tennis and Education Program. It's a non for profit education program for inner city kids to learn the game of tennis. Caroline I spoke with Katrina during the first week of Action at the US Open, and she explained how she draws on her own personal experiences as she

tries to help cultivate future generations of tennis players. I started playing tennis when I was six in the city Parks of Chicago, Garfield Park on the West Side, through a local program and was able to progress through the sport. I had someone to a coach of that program, thought I had potential, took me on and I started to navigate the sport. You know, playing locally, sexually and then

ultimately nationally. And I grew up in a program that was really an in JTL pilot program back in Chicago, Youth Action, and now our run one here in New York, so we have it's all about the grass roots. If we have to build a base in order to get some champions to come out in the future, and and that's about growing and developing the sport of tennis. Is that base big than it was in the nineteen eighties

when you were going through it? You know what? I think I started in what they called the baby boom back then tennis was so popular in the US. But I would say the base has become more diverse since when I was playing in the seventies, and and that's a testament to players like Venus and Serena, williams Um and then of course Sloan and Madison and Taylor and now Coco. Is it actually more accessible though? Absolutely? I mean they're their programs and all all over the country.

When I talk about the n j t L, the National Junior Tennis and Learning Network, there over two hundred chapters nationwide. The USCA Foundation funds many of these programs, whether it's financial or just with human resources and helping them to develop and grow. But there are also so many other community tennis programs around the cities, in the city parks as well as in some of the clubs as well. You know, when you look at tennis and house evolved over the years and it's a lot more colorful,

a lot more excitement in the sport. You look at the Nick Kurios and he's actually drawing players into the sport because I think it's cool and that's what we need. We need personalities. He has a personality, but you know, Serena has a personality too, And you know, you look at the queen and the greatest of all time and what she is accomplished in her career and the number of athletes that she has attracted to the sport, boys

and girls alike. I think it's phenomenal. I was reading your background and you know how you grew up right the West Side of Chicago, youngest of three, only girl, and there's a story. I guess it was sports illustrated growing up with the nineteen eighties when gangs were on the rise. That was their words. I hate that. I'm going to ask this you know, how did you do it?

Because I feel like, you know, we are a diverse society, but we're still asking that question because many of the industries in our world are not as diverse as they should be and need to be. So, you know, how do we get there? It sounds like programs like you're doing, but how do we even get more diversity in a sport like tennis? Well, I think we've done a great job we made in the us c A over the years and becoming more accessible, um through programs like the

nj t L chapters. UM, we have adaptive programs as well. UM. You know, we're a huge supporter of the lgbt Q plus community, and so last night was great, absolutely Pride Pride Night was last night with HBCU Live the night before. So when people turn on the television, they can see themselves in our sport, which as wow, they're they're accepting. You know, I want to try that sport. I want to find out more about it. How do I get

more involved? And so we've definitely done a tremendous job over the last twenty years, I would say in opening up and being more open. Will be open is a hard when you started I won't say it was hard when I started, because when I started, I grew up in a community program. You know, I had coaches that loved me. I joined a program. In the wintertime, I joined another program. I started playing a t a nationals.

I tell people that I didn't know that tennis wasn't a black sport until two years in because the programs, in the tournaments I were playing, there were so many black tennis play airs that were good and competitive and and so until I came into the USC system and the late late seven I don't say, I don't want to say it was tougher. It was just that because I was good enough to start playing or wanted to continue, that it was more challenging because I was the only

one that I would see these tournaments. But it's it's um. It became a cost effective matter for a lot of the kids that I started playing tennis with. Katrina. The state of the US Tennis UH program when the Williams

sisters are on their way out, it's awesome. The USA Player Development Program has done a phenomenal job of being more diverse, as we're talking about that, be more inclusive, making sure that these kids have a pathway to be, to develop, to be the champions that they want to be, and hopefully be a champion Right here on our thresh stadium. That's Katrina Adams, former president, chairman and CEO of the U S t A, and a big thank you to all of our guests who appeared with us on site

during the tournament. You're listening to Bloomberg Business Week. Up next, we'll turn a from tennis, but keep an eye on the entertainment world. The former CEO of Movie Pass Mitch Lowe, details his journey from video stores through the streaming wars, and he's got a bold prediction about the next era of personal entertainment. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim

Stinovik from Bloomberg Radio. Last month, the Pursuits section of Business Week gave us a preview of what to watch this fall, from the Game of Thrones prequel series to a Mike Tyson Hulu documentary, which, by the way, our critic did not love. This week, we're rounding out our broadcast with more screen time a guest who's got a Macro review when it comes to the movie industry. Bloomberg senior markets reporter Katie Greifeld and I spoke with Mitch Low.

You might recognize his name. He was an early executive at Netflix. He's former president of DVD rental service red Box, and also the former c of Movie Pass. Mitch dropped out of high school. He found himself in Eastern Europe, and then he became the owner of video stores, and somehow that experience led him to a Nissan company that would later become the world's premier movie streaming service. We're talking,

of course, about Netflix. You can read all about it in his new book Watch and Learn How I turned Hollywood upside down with Netflix, red Box and movie Pass owning video stores. You could see the writing on the wall that it wasn't going to last forever. So I was always looking for new revenue streams and new businesses

that could fit into this whole home entertainment. And I had founded a company called n s I And what we were doing is we remember this is we built a menu driven platform for video stores to build their own websites where they could send the newsletter, they could sell us movies, and they could show their customers their inventory. It all seems like real easy today, but in those days that was hard. It was a subscription based service.

I was exhibiting it at a trade show in Las Vegas and a guy came up to my booth and started asking me all these questions about DVD which had just been released about six months prior. He kept asking me, do you think it would break if it went through the post office? Do you think people would rent on the internet? And and that was Mark Randolph, and of

course became a great friend and introduced me to read. Okay, so you spend until two thousand three at Netflix, and then you see an opportunity after Netflix in the form of DVDs, but not delivered by mal we're talking red box here and McDonald's. I think a lot of people are would be surprised too, you know, if they didn't follow the industry closely that it that it was so

closely aligned with McDonald's in the early days. You know what Netflix as as uh, you know, we got that hockey stick experience with the kind of the all you can eat subscription model. What I saw is that there was an other consumer in the US who couldn't afford in fact, didn't want to get committed to a subscription. Uh. And they were, you know, really interested in the new releases.

They were interested in something very economical. Uh. They had tight budgets and and so the DVD vending machine idea was to serve that other, which it's about forty of us households that are on a budget, you know, need something to fill time. And what we were trying to do is to make it easy and inexpensive to rent the big hits that you normally at that time would pay four and five dollars for. We came out with a dollar in night pricing. Hey, Mitch, um, let's talk

a little bit about where Netflix is right now. As you know, the company's stock prices certainly struggled this year. Curious about your thoughts on on whether we've hit peak Netflix and it's kind of downhill from here for the company. I do not think so. You know, the people and the culture that was built at Netflix will almost always overcome these kinds of challenges. I think the impact on

their stock was way overdone. I mean, when you think about it, they really only lost a couple of percentage points of their subscribers. Yes, it's true that you know, their competitors have almost equaled their size in a in a few short years if you add a Disney plus and paramount. But I see, I see Netflix taking that huge next step which I think is going to be a whole new way for people, especially young people, to consume entertainment. And I and I would not count them out. Okay, Mitch,

we've talked about Netflix, We've talked about red Box. I want to talk movie Pass here because I think a lot of people became familiar with you. You became really a household name if you're covering media. You know when movie Pass essentially went viral and ultimately it created a product that it it couldn't actually fulfill to consumers because it got so popular. The idea, of course, was ten bucks a month for unlimited movies. What, in your opinion,

happened with movie Pass? Why did it fail? It failed for a number of reasons. The first one was we ran out of money. What we were trying to do a movie Pass was not unlike what we did at Netflix, not unlike what Spotify did. You gotta remember Spotify lost one point four billion dollars before it got to break even.

And what we were trying to do is to build a large pool of movie goers and then monitor slowly but surely, get more and more of the average movie goer who wouldn't go four or five times a month, but go two times a month. Get a discount on tickets, and monetize those customers, you know, get them to use our card for babysitting and going to Starbucks, where we would earn seven per cent By helping market small films. We were on our way, but we needed a longer ramp.

In the hindsight, I see things I could have done a little bit better to slow down. Kind of how fast this happened, But you know, we were on We were on a path. We had a great strategy. No one believed that it was doable. I remember when we launched Netflix in September of nine, when we first started the all you can eat program, we were terrified that there was no way we could break even on it. And so it wasn't an unusual model. The problem was

we didn't have enough time. Insider reported a few weeks ago the movie Passes set to relaunch. Are you involved in that at all? No, I'm not. I'm it is actually the original founders or one of the founders, UH bought the assets of the company and he launched yesterday with a revised movie Pass offering. All right, I want to switch gears pretty traumatically and go from Movie Pass

to the book. It's titled Watch and Learn How I turned Hollywood upside down with Netflix, red Box and Movie Pass, which I want to focus on the learned part of that title. What do you hope are the takeaways from this book? I tell stories about what happened, you know, the challenges we face and how we resolve things. And I entitled the last chapter about movie Pasts is how

I forgot everything I ever learned. And one of the lessons is sometimes you get caught up in growth, and you can get caught up in kind of a momentum, and it's important to always step back and and and look at the bigger picture. Uh. You know, there's another chapter where I don't ask for enough advice. You know, that's something that I think is is super important. So there's a lot, you know, there's there's a lesson in every chapter. I try to focus on the things that

I did wrong, the decisions I made wrong. And you know, I don't try to preach. I feel that by telling the story, in some cases people will go, oh, yeah, I've been in that situation, or if they get in that situation in the future, they'll it'll at least get them thinking, well, Mitch. In addition to the lessons, you also have insights predictions for the future of content. And

these are the conversations I love to have. Uh, where do you see the media landscape, the way that we consume media shifting in the next five to ten years. Tim jokes about the metaverse earlier, but that's a conversation I'd love to have. Yeah, you know, the metaverse will really play a significant role in entertainment going forward. I think there's a few big macro trends going on, and I talked about this in the book. One of them

is our shorter and shorter attention spans. Uh. It is hard to sit down for a two hour movie, and it's even hard to sit through a thirty minute series episode. So I think that the combination of that shorter attention span and all this user generated content, whether it's on TikTok or YouTube, will kind of you know, pushed you know, uh, studios and Netflix and everything to start to create shorter episodes.

You know, still people want, you know, good stories that where they can fall in love and and and care about the characters, but they want to consume them in more bite sized chunks. So I see, you know, series still becoming major and and I see them in smaller segments. But I also see a world in where it almost brings in and I think this will be true for

many retail and environments. Imagine Netflix in the metaverse, where you can go from wherever you live in the world and attend a red carpet screening of a new series or a new movie, and there's avatars of the scars and the creators. You can interact with them, you can

shop with them, and even run into other consumers. And it's kind of like in the old video store days, where you could talk to people in the store suggest When you thought that we'd have an entire program without a mention of the metaverse in it, we somehow managed to squeeze it in. That was Mitch low, the former CEO of Movie Pass. His new book is out now. It's called Watch and Learn. How I turned Hollywood upside

down with Netflix, Red Box and a Movie Pass. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us for Carol Masser, I'm Tim Stanevik, and also a big thank you to Katie Greifeld for helping us out this past week with Carol out. Be sure to tune into Bloomberg Business Week Monday through Friday. It starts at two pm Wall Street Time on Bloomberg Radio. You can also watch our daily broadcast on YouTube. Just search Bloomberg Global News

and check out our Bloomberg Business Week podcast. You can find that at Bloomberg dot com, Apple, or wherever you get your podcasts. Bloomberg Business Week is available on newsstands now at Bloomberg dot com and on the Bloomberg Terminal, and you can also see me on Bloomberg Quicktake available on Bloomberg dot com, slash Qt, and streaming platforms like Roku, Apple TV, Samsung TV, and more. Have a great weekend everyone. This is Bloomberg