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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. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
All right, we're going to stay with the equity universe, Tim, and one stock in particular that's down about two point two percent as we speak.
Yeah, that, of course has shares with the Walt Disney Company down two point two percent thanks to a showdown between the company and it's CEO Bob Iger and activist investor Nelson Peltz and his try on fund management. The showdown came down to shareholders declaring the winner. That winner Disney and CEO Bob Iiger.
Yeah, and they had the backing of big institutional investors that hold a big junk of Disney shares. We're talking about Vanguard and black Rock excuse me, who owned about fifteen percent of Disney shares. All right, with more on that out and what we need to know about Disney, what it really kind of needs to do to get back on track back with us as Bloomberg Intelligence technology media analyst Getha Ranganathan from RBI headquarters in Princeton, New Jersey.
All Right, Githa, she's been busy today votes over. What's the impact of the vote and the outcome on what Disney does next, or maybe what you think it should do next.
I think this is definitely I think a personal win for Bob Eiger, who has spent so much time over the past few months kind of canvassing for support, I mean, rallying all the investors. Remember, Disney has a huge, huge retail investor base. Almost forty percent of its shareholders are retail investors, and he has spent a lot of resources, more than forty million dollars kind of trying to get their support. So I think this is just, you know, a job well done for him, in a huge sigh
of relief. But in terms of what the company is doing, I don't really necessarily think that this shareholder vote outcome has any impact at all on near term trends. Bob Iger has already kind of taken control of the narrative. He's gotten a lot of things moving in terms of you know, content cost cuts, cost cuts actually across the board, there's just rationalization of output. There's investments in new growth areas including you know, gaming. We saw that one point
five billion investment in Epic Games. So he is doing everything to write the ship. There's obviously a new digital strategy for ESPN in place. So I think we're just going to continue to see, you know, management do more of the same. I think the one thing that's going to be a little bit different, Carol, is there's going to be intense scrutiny on this board to really come
up with a good succession plan. I think that is one thing that you know, most of these activist investors kind of kept founding the table and kept saying, you know, you guys really botched succession and please don't bungle it this time around.
So was it?
Wait, I'm sorry, well, so was it? Do they not like that Bob Byger came back? Is that the problem that they say that when Bob Ayger left the first time, that that was the succession planning that didn't it was his place or what?
Yeah, it was not so much Bob Iger coming back, but him kind of suggesting Bob Chapek and maybe the board didn't push back enough. Got it right? Because he didn't. Yes, he was a parks executive, but did he have all the experience needed for running kind of the content engine.
Clearly he didn't, and that's where a lot of the missteps kind of surface, right, And so you know, there's been this constant complaint about, you know, did the board really do their job or were they just so enthralled and so enamored by Iiger that they just took his word at face value.
Yeah, that's what we heard yesterday from Comptroller Brad Lander in his comments to Scarlett during that interview late yesterday about this ahead of the vote. So, what about some names here, keitha that could be floated if we're talking succession at Disney now that this proxy battle is behind Bob Iger, what are some names we should keep an eye on who's being floated around so Disney, Jim.
It's typically been an internal candidate. I mean, if you go back many, many years, I mean, you know, up until nineteen eighty four, it's always kind of been an internal candidate, and so I think that's what's going to happen this time around as well. Obviously, the four big division chiefs are in play here. We're talking about Dana Walden, who hads TV. We're talking about Josh Tomorrow who has Parks. There's Jimmy Pittarro for ESPN, and then there's Alan Bergman
from the film and the studio segment. The problem with Disney is it's just such a diverse conglomerate, right, It's this behemoth, and you know, Josh Tomorrow having vast experience in Parks isn't really going to help because he has absolutely zero experience in running a TV network, or in running a streaming service or even like, you know, coming up with green lighting a film. So that really is
a problem. And you know that has kind of always been the persistent problem with Disney because you have these executives who are so good in one specific area, but who have absolutely no exposure on the other, and so it's going to be a really challenging you know, obviously, Bob IGO's shoe was a very big to fill. So the idea is that they're probably going to have somebody come in as a COO kind of get that experience in all the different segments.
Got it.
We're going all in on Disney during the first part of this hour today. From how the company prevailed to what it means now that it's triumphed over Pelts. First, Keida Disney's win was the backing of the company's two largest shareholders, none other than Vanguard Group in Blackrock. Together they control about fifteen percent of Disney's stock. Crystal c is Bloomberg News Deals reporter. She wrote about how each side campaigned ahead of the vote and the importance of
the institutional backers. She's here in the Bloomberg Interactive Brokers studio. So we talked about I mentioned Vanguard and Blackrock, but talk about how they came out and support aiger ahead of this.
Yeah, so we reported that Vanguard, the largest institutional shareholder with almost eight percent share, was supporting the company the management yesterday. So it's actually pretty unusual for an institutional sharewoad of to nottsard management. So that was interesting. But actually what's missing here is that the biggest voting block here, it's actually retail investors over thirty percent. Actually almost forty
percent of Disney stocks are owned by retail. And you know, a lot of kids when they were born, they get a share at Disney as a present, and a lot of these are Disney fans and they tend to side with management. Actually, in any given proxy fight, over eighty so.
The retail also sides with management.
So any given proxy fight, eighty percent of retail investors that vote would side with management.
That's just typical.
It is a typical scenario. Not all of them vote. It is incredibly hard to get retail investors to actually cast their vote because a lot of them are not used to this proxy process. But this actually had happened this time as well, Like we've seen the show up from retail and those are also siding with management. And that's why we see today's result that Eiger and all Disney nominees have been re elected into have been elected into the board.
It just feels like, you know, Tim, it was kind of a tortuous, long, costly fight for Disney. We know that they've been you know, going after this and then when all a said and done, you know they're still in place. But they obviously, as we heard from we talked with Githa bring an Othn of our Bloomberg intelligence team, that they've still got to make some changes, especially when it comes to succession.
Yeah, I want to get to those changes in just a minute, but about it, But I still want to stick on the voting side of things. Even though even though this is, you know, Bloomberg reported this yesterday, I still think this is fascinating, Crystal, because there were also some companies and individuals who came out in a prominent individuals, prominent board members who came out in support of Nelson Pelts.
It's like being picked for, you know, a volley volleyball game or dodgeball, right, who gets you gets your guests.
Yeah, there's a lot of you know, we are endorsing Nelson versus we're signing with with Iiger. So there are institutional, fusional shareholders that voted with Pelts. Newburger Burman actually said in the statement that they would vote for Pelts, and they did. And again because so much of this is owned by retail shareholders, right, and there's actually no once
in constitutional shareholders that had over ten percent share. So even if you get all the index, all the passive investors to vote for you, you're still you really still
need to count on the retail investors. And that's what Disney is doing really well on this proxy fight, where they have gone all out in the social media campaign and you go on Spotify, you go on Instagram, You're getting all these ads of a friendly Disney's voice telling you to fight for the white proxy card, and that had actually successfully pulled someone out votes for them.
Well, nothing like a media company don't knowing how to market itself, right, I mean I heard some.
Of those ads yeah ahead a podcast, so I was like, why are we hearing these ads?
That is weird?
I mean, is it unusual for a company to be that aggressive. It's almost like, you know, before the oscars, right when the movies go out, like for Bob Iger exactly, But is it unusual to kind of reach out in that way?
It is unusual because this is actually the most expensive proxy fight that we we've seen. The data is showing that Disney actually had said they spent over they budgeted forty million dollars. Yeah, this proxy tip and that goes to things like social media, post that goes to mailing, traditional mailing to their shareholder list, and those things are expensive. And now that they've won, that is finally going to be set aside, you know, and you can focus on
running the company again. But it's time consuming and very costly.
Okay, So speaking of that, I want to bring in a Jamie Lumley, senior analyst at Third Bridge Group, joining us from New York City. So, igers won the battle, Jamie, Now he's got to fight the wars. We just heard from Crystal. The pressure is still on. What is at the top of the agenda for him to do now that he's won the proxy vote.
Well, the pressure is definitely still on. And it's hard to think of just one thing the top the agenda because it's so long. But if you had to pinpoint, one thing that I think investors will really be looking at is streaming profitability. The company's planning on finally driving profits in fiscally year twenty twenty four. This is coming after so many quarters and years of billions and losses in this segment, and we've heard Bob Ayer talk about
how important the streaming transition is for the business. Really making sure that they're hitting their mark and achieving their goals. That's definitely priority number one as they move beyond this proxy fight.
Yeah, it is interesting. I mean, Tommy, we're talking kind of in the newsroom. It's like they won the battle, but have they won the war?
Right?
They still have to make some changes. I mean, at the core of what Disney is. It's a lot of moving parts, and some are much more significant. I find it wild to see that we are looking at a Disney today that when you talk about what really moves the profit needle, it's really parks. At this point, parks are definitely huge.
And if we think back to one of the big news stories at the end of twenty three was the fact that Disney is doubling its capital expenditures and it's parts and experiences business over the next decade, and sixty billion dollars is substantial, and it really shows the realization at Disney that while of course it is a priority to build out streaming to make sure that they have a transition away from the linear assets which have historically
been a big profit driver. Parks have been consistent coming out of the pandemic. Domestically, it's been a strong profit driver. International has served seeing the year on year improvement in those markets. It's definitely a top priority. And one big question also that investors have is where this new capital investment is going to go. Because today, and you could hear this on the shareholder meeting today, Disney is not really given. They haven't shown their hand as to where
these dollars are going to go. There are some large projects, but there's still some uncertainty as to how exactly they want to strengthen this business for the future.
Jamie, what do you think this means for the succession planning at Disney, because that had come up over and over again, and not only just from Nelson Pelts, but also the other active as black Whells.
Well.
Certainly, if Pelts had been able to get on the board here, it would have been really interesting to see what that would do to succession planning, as it could have definitely elevated the chances of anybody who was not currently at Disney. As one of the major points Pelts has reiterated over and over again is the advantages of having an outside, fresh perspective both with Disney getting their
board together have solidifying control. Here, it really turns to looking at those leading internal candidates, and there's been so much speculation about who this might be, whether or not you want to prioritize someone in the entertainment division, which needs a lot of work, or the parks business, which is, as we've highlighted, an incredible big profit driver, or sports, which is you know, another huge dynamic area with Disney, with the joint venture coming up, ESPM being lost in
the flagship. There are arguments for leaders of all these divisions taking the reins, but the big question, of course is who is best suited to manage all of these altogether.
Well, let me ask you that, Jamie, I mean, who is the best suited? I mean, I remember that you know what they did, right, It's always been kind of internal candidates. I remember when Jay Rozzulo was CFO and Tom Staggs was head of parks and they, you know, would switch positions so that they could learn more about the company and with the understanding that one of these guys might be the air apparent at some point. It
didn't play out that way. But do you believe that it needs to be somebody internally or does it need to be somebody maybe from outside with a different look, for a different view maybe on the company.
So at Thurdbridge, what we've been hearing from the experts we speak with is really just the strength and importance of Businesy's culture and determining who this is going to be and how more likely than not they're really going to lean on some of that internal muscle that they have, And if we look at some of these leaders, there's Dana Walden and Alan Bergman over leading the entertainment division. Both could potentially be a good fit to really regalvanize
that business. Josh Tomorrow over experiences to really lead that. There are definitely some individuals with impressive track records who could come in here internally and lead this company. But of course it's really hard to know exactly how the board is going about this. They've been fairly hush hush about who exactly is even officially in the running here. But there are definitely some people to tap internally who could be a very strong leader, But you don't think.
It should be somebody externally.
Then it seems based off of what we're hearing, it is fairly unlikely Disney will turn externally. But then again, we'll have to see what the board wants to do here.
Hey, Jamie, tell us take us into the economics of streaming here, Like, why is it so hard to make Disney plus profitable? I mean Netflix, Look, it took a long time, It's been many years, but Netflix is profitable.
They know how to do it, and Netflix is profitable. And one thing which is amazing is that they've been turning an operating profit ever since they launched streaming in two thousand and seven, which is definitely amazing and one thing that all the streaming players, Disney included, is jealous of. And there are a couple of reasons here why it's been such a big loss leader. First of just customer acquisition.
There's been such a race to have growth at all costs, to try to catch up to Netflix's scale, which at this point is looking increasingly difficult with them at two hundred and forty million Disney around one fifty one sixty for their core Disney plus offering. With that growth comes a lot of marketing so many dollars and to try to get people to come and stay. And then also
the content costs. We've heard so much about how content is king and how there's been this golden age of streaming and the programming spend that it is accompanying that. That is one thing which also right now is coming to a bit of a shift over the last year or two with profitability at the forefront, with the strike,
some delays and content spend. That's one area which is getting a bit of an adjustment as Disney and other players try to balance the books and not make sure that all their spend is rationalized, so between content, between marketing, between Also it does building the infrastructure for ad supported tears, making sure the technical platform is there. There are a number of major costs to make this a large, scaled and viable business.
So, Jamie, I don't know if you cover Apple by any chance, but we just have a story about our own marker, I mean, just crossing the Bloomberg. Apple has teams investigating a push into personal robotics, a field with the potential to become one of the companies ever shifting next big things. This is according to people tim familiar with the situation, follows just shortly after they said we're done with the car.
Yeah, Engineers at Apple have been exploring a mobile robot that can follow users around their homes, said the people, who asked not to be identified because the Skunkworks project is private. The iPhone maker has also developed in advanced tabletop home device that uses robotics to move a display around, they said.
Gap efforts said to be in beginning stages, and it's unclear if the products will ultimately be released. Shares of Apple not really necessarily moving, although they look they're moving a little bit lower on this news, down about half a percent. Before we go back to Disney, Jamie, any thoughts do you follow Apple?
I cover their media team. So we've got an a question about ted Lasso.
On Yes, that's great, right, well played, Jamie, well done.
Well done. All right, So I don't know, what is there a timeline that we have to give Disney at this point?
Well, the thing which we really have to hold Disney too is definitely the streaming profitability goals. I mean seeing if they can achieve that. One of the big questions is, you know about Bob Iger's return to this company, making sure he's executed on that while also seeing the CEO transition succession happen. That's key, And then also more color about the long term operating margins for streaming. They want double digits. It took Netflix a decade to get double
digit operating margins consistently. So those are definitely some things to look at, and really that year timeline is going to be key for the company.
And what about the parks. They have said that they're going to spend sixty billion and revamping the park in universal studio. It's said that they are going to have some new attractions. They have a new location in Florida where it's Disney's home turf. What do you think about the sixty billion, how do you think that should be spent?
So what we've been hearing from our experts is that really the priority for Disney is much more on these huge immersive experiences than one off rides, think the traditional space mountain kind of feature. They're really trying to build these new lands which have people just spend so much time in the park and drive these really engaging experiences and then also justify the increasingly expensive day passes that
Disney commands at its various parks. So in terms of where this will go, Disney's announced a variety of different features, if you listen to the call today, expanding different uh you know, massive experiences in Paris and Tokyo and their international stage. So looking at some of these large scale projects is what we're going to be keeping, you know, and you're out for for Disney to really get some clarity.
As for them, of course, the constant story is how do we monetize their under year history of its and their new stories and these immersive experiences are definitely one of the areas they may look towards.
Hey Carroll, you know one character you will not see at Disney at the Disney Theme parks, Blue, despite the fact that Blue is streamed on Disney Plus throughout the world except for China, New Zealand and Australia not yet.
Tim Stenefek, Well, they.
Don't have the rights to it. They didn't, They didn't buy up the rights.
So maybe just negotiations, or maybe they.
Miss the last Devin Leonard in a few minutes.
All I know is I've been to the park. It's a long time. My daughter was younger. I got to say, I had a blast, and I kind of want to go back and go to the Frozen Park. I've never been there.
You want to be one of the grown ups who goes with out kids today. Yeah, there are a lot of them. There are a lot of them out there.
Oh, Jamie, thank you so much, a lot of fun. Really appreciate your insight. Jimmie Lumley, Senior analyst over at Third Bridge Group, joining us in New York City, and of course our thanks to our own Crystal Sea. She's a Bloomberg News deal reporter right here in our studio. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then brought auto with a Bloomberg Business Act or watch us live on YouTube.
Butts, get to macro backdrop today and also a market reaction. First to that macro backdrop, you've got the latest set of economic data doing little to alter bets. At the FED, we'll deliver ratecasts this year that included a report showing a slowdown in services, a drop also in prices to a four year love that was enough to halt a slide in equities. And then Timmy had Private Jobs, a reading that continue to underscore a solid labor market here in the US.
And then in the middle of the day, at least Wall Street time, we had a FED Shair J. Powell speaking just about two hours ago at Stanford's Business Government in Society Forum. Check out what he had to say on inflation.
It is too soon to say whether the recent readings represent more than just a bunk. We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward two percent.
All right, greater confidence inflation moving sustainably down to two percent with more in J. Powell's comments the latest data, and not on him wearing a purple tie. Again, we're not going to talk about that, although that was in our Bloomberg Live blog. Let's get to Bloomberg News Economics editor Molly Smith. She's here in our New York studio. All right, J Powell, Molly any new messaging and ear did you guys not really? Okay?
Well then I guess we were listening to the.
Same I heard some new messaging about like career advice.
Toward the end of that was new Okay, right, I mean you're looking for.
That's not the band, but it's not the mad You don't hear that from Jay?
Yeah, I mean situationally. Now he's talking at Stanford versus you know, at the FED meetings to a bunch of economic reporters who are probably staying in their career for a while.
But it does feel like, in terms of FED speak that we are getting as of late, that maybe they're dialing back how much we might see in terms of FED cuts are we. I don't know, do we get any of that from jet From Jay Powell.
I think he's still just trying to, you know, basically hold the market at bay here and not let people get too ahead of their skis on when the Fed is going to cut and how aggressively that's going to be. I think that's still have been pretty consistent with the comments we've gotten from him. You know, he's really just sticking to the language of cuts will be appropriate. Quote at some point this year, saw Bostic earlier today saying this year, yes, you know, Bostik's been a bit more
specific calling for the fourth quarter. Other people more just right right, and others more just generally the second the.
Okay, So how do you weigh that against what we heard from Powell? And how do you sort of take what we're hearing from some of these other FED speakers but also from j Powell.
So that's the thing where it seems like there is a bit more divergence splitting in terms of how many cuts the policy makers think will be appropriate this year. Remember that the FED did uphold in the March Summary of Economic Projections three cuts for this year, but that was a close call, very easily could have been two.
So there are people really on both ends of the spectrum we know now we now know sorry which dot bostis is that he's really just seeing one cut this year, where others are more split between.
Two and three. The data that we keep getting, we got ADP employment today, Global Services, PMI, ISM services, anything interesting or just kind of supports this idea that hey, folks, as J. Powell has said, the US economy doing okay.
Good, Yeah, both things on that. I mean, it does support that the economy is still doing well. But I think you know, a really good sign from the ISM services gauge to see the services prices easing. That has been, of course the stickiest source of inflation. We'll see how much that feeds through into the CPI and PCE measures of services inflation. But that would be a telling sign if that does come to be in the other indicators.
All right, good stuff as always, and we do see yields backing off some of their highs, some of those earlier highs that we saw today. All right, Bloomberg News Economics editor Molly Smith, thank you so much. Appreciate that.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on applecar Play and ANDROYD Auto with the Bloomberg Business Ad. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
Well, if your parent kids of a certain age, then the TV show Blowy needs no introduction. Like Tim, You've probably seen it, you probably love it, and you're more than happy to pay Disney plus each month to keep
those episodes streaming. As Devin Leonard writes for Bloomberg BusinessWeek, it's quote a show that's both hilarious and deeply moving, and its portrayal of how children come to terms with the world by playing games, and how parents can foster this by joining the fun, no matter how wacky it becomes. Devin Leonard is a Bloomberg BusinessWeek Senior Global Business Writer. His story the cover of the new issue of Bloomberg BusinessWeek magazine. It's available on newsstands, on the Bloomberg and
at Bloomberg dot com Slash BusinessWeek. Devin, I can't tell you how to let it. I was to see that Blue got the cover treatment. He was off the show I heard this was happening, I was like, I cannot wait to do this, but but give us an idea of how this story came together.
You know something Hermant, who's one of the editors, she asked me to do it while I was in the midst of some piece about Sean Diddy Combs and his demise, and you know, it's kind of like, you know, I was just like, yeah, sure, because I like to take assignments. I had never heard of this show. I'd never watched the show, and frankly, all I knew was that it was I thought it was a Disney show, which it isn't even a Disney show. It's it's just a show
their license. But I started watching here for them, Yeah, well not sound likely for them, but but no, I just you know, I started watching it and really really got into it. And then I realized actually the people who were who were you know, were really sort of handling the licensing and the merchandising, well you know, it was actually BBC Studios, the commercial arm of the BBC. So I started talking to them, and you know, I was going to go to London, was I going to
go to Brisbane Australia. Well, I wound up going to Brisbane, Australia, where I also met along with, you know, some of the top people from BBC Studios, Joe brom the show's creator, and also the founders of Luda Studio who produce it. So it's a whole you know, kind of kind of a you know, amazing thing culminating the trip you know, last month.
So all right, because you know how popular it is, because you watch it a lot, and I think if my daughter was much younger, we would be watching it.
I'm my kids to watch them. Hey, hey, hey, you gotta check this out.
Well, the funny thing is it's not just appealing to kids, but talk to us about how popular it is.
Well, I mean it's it's not. It's not just the most streamed kids show in the US last year, it's the second most stream show period after Suits and Suits is nine seasons of episodes that are about you know, almost like forty two minutes. So I mean that's the whole thing that you know, lots you had lots of streaming numbers for you know, if you have lots of episodes. Blue has one hundred and fifty episodes. They're only seven
minutes long, and it's just just three seasons. And yet you know, you know, people are watching more Blue than you know, than Friends than gilmore Girls than you know and cis so so you know, you know, I mean, I mean, you know, there's there's something going on. You're you know, you know, something really crazy with you know, with the It's not just kids watching it, you know, it's it's a lot of other people too.
You know what's interesting in your piece that I had no there was. I learned so much in the piece. I encourage everybody to read it, even if you've never heard of this show. What I found fascinating was this wasn't something that was set to be a hit from the pilot. I mean, this is not following the formula of the typical kids show by any means. This is not cookie cutter, right.
Well, no, that's the crazy, that's the crazy thing. You have this guy, you know, Joe Brown, he's forty six years old. You know, he lives in Brisbane and you know that's where he went to high school. He spent some time in in London as an animator, you know, worked on some shows on the BBC. He came back to you know, Australia had a sort of a little animation company that he was running for a while out of his house and he kind of missed, you know,
being around a big crew. So he was sort of like, well, if I'm going to have that again, I need to create a show my own show, becau. That's probably the only way it's going to happen. So it's like, well, what's that show going to be? And he liked Peppa Pig, but he was like, you know, I couldn't he could you know, you couldn't rip off Peppa Pig, you know, you know, and do you know that's like Peppa Pig's family or pigs and all the other families are other species.
So he's like, okay, so I'll make a show about dogs, you know, my you know, you know, you know, my family will be Australian blue heelers and their families we Dosin's and Bassett Hounds and all stuff.
So then so.
Then he's he's he's home. He has two kids, who it turns out of the same age as as Blue and Bingo are about the same age as Blue and Binger are. Now they've actually got an older on the show Bluey's seven and Bingo's five. They started out of six and four. But but but so he was able to draw on his own experiences because he's home with them, you know, he's trying to work and he's running up and down the stairs, and and anybody watched the show,
that's what's going on, you know, with Bandit. The show's father and banned It, by the way, is an archaeologist, you know, sort of a not a state home but almost a stay at home archaeologist, which is kind of interesting. But but but but in any case, he put together a pilot. The pilot, you know, you know, it had Bandit taken Bluey to the to the playground. Bandits playing you know, fruit and Ninch on his phone. He pushes Blue around the swing set. Blue goes on the swing set,
clunks him. He shows it to these guy's at Luna Studio who he done some work for, and they liked it. And it was supposed to being the fun to start, he wanted to do a show is kind of both for growing ups and for kids. So that's sort of you know, with two levels of kind of humor. Even though but anyway, Gludos guys liked it. They tied to shop around and people said to them, Hey, is this
family guy or is this Peppa Pig? And they were kind of like both and and you know, and you know, people just didn't get it, except for one guy, Michael Carrington, who was head of Childrens at the ABC in this case, the Australian Broadcasting Corporation. But but it's just, i mean, just just the genesis of the show is you know, it's so strange because because really it was just Joe Brum, you know, you know, missing being around a lot of other animators.
First of all, I've always adored you and I love your reporting of respective but to hear you talk about Luian in such detail, it's just takes it to a whole other.
Level difference from talking about Diddy. Yeah, I'm like trying to think, we'll wait the last time we talked with you, which is what makes you so wonderful, Devin Leonard.
I know, but it's it's just such this material. It's just as rich. It's crazy.
Well speaking of rich, right, it's made a lot of money for some people.
Yeah, I mean, I mean it's it's well, it's well, it turns out the ABC basically you might you might say that they really sort of discovered the show, and Michael Carrington was able to get the ABC to put some money into a pilot. He said, he said, I would have greenlited, you know, you know, on the spot, but they didn't have the money. But they did give you know, Joe Browman, you know, Ludo's enough money to actually you know, make a five minute pilot, which BBC
Studios loved. But as part of the deal, BBC Studios wound up with the international distribution and licensing rights and you know, and the you know, the ABC guys like, well, we don't have those kind of resources, so they might as well, they might as well, you know, you know, you know, take that. But so then they're the guys that have been making making you know, you know, all the money. I mean, you know, LUDA Studios controls it, so obviously they're making money. Joe gets a gets a
percentage of the revenues. But but they're the people doing all the toy deals, okay and all that.
Yeah, well what about Disney, Well we'll watch it in most.
Of the world.
Yeah.
No, I mean, I think I said before I came into this whole thing, this is a Disney show. You know, oh no, it's just a show. They licensed it in twenty nineteen. They outbid a whole lot of other including Nickelodeon to uh, you know, you know, for for the rights rights to distribute the show, i e. You know, on their platforms, on Disney Junior, Disney Channel and on Disney Plus. But what they passed up at the time they also had had had the chance to license the merchandising and the theme park.
Rights, which they understand.
Yeah yeah, but but but but but but but so that's you know, that's something they really regret now because anyway, yeah, good.
Okay, we'll get about a minute left.
Season four. Is there going to be a season four?
Asking for his kids?
Well, well, you know there has there hasn't. It hasn't been announced, and uh you know, season three is about to culminate with this with a special episode. The sign is twenty eight minutes long, and uh, you know, people are sort of saying, oh, you know, there's going to be a season four, but well, well, actually nobody can say for sure, and we're trying to act as if there's going to be one. But season three was greenlit
in twenty twenty. I mean that's been running in Australia since twenty twenty ONETHS so so so basically they wrapped, you know, they wrapped season three, you know, you know in like around in twenty you know, sometime in like twenty twenty two, maybe late twenty twenty's. So there's nothing else out there. And this is when when you know, the excitement about the show, it's just you know, it just keeps getting higher and higher, you know, you know,
people are really excited about the time. But then what and also what's Blue worth? You know I didn't mention mentioned before, but but you know Blue has been valued, you know as you know, said to be worth as much as two billion dollars. It could be worth it, you know, going forward, it could be worth as much as Peppa Pig was and it was sold to Hasbro. Yeah, you know, if it's for four billion dollars, but with three seasons, you know, I don't know, and it's just unclear.
Joe browm who's really a creative genus whether or not you know, he wants to keep going interesting.
Well, and when you're a balloon in the Thanksgivings Day Thanks Aavy Day parade, you know You're a big deal. This was a gem. Devin Leonard, a senior global business writer for Bloomberg business Week. It's the cover story of the new issue of Bloomberg Business Week that will be out on newsstands, already online and on the Bloomberg Terurnal. Devin, thanks.
Umbromac a journal.
How about you let me drive?
Oh no, no, no, no, who's going to drive?
Honey?
Please, I'll gravel.
Wait, I want to drive.
It's good question. This is the drive to the globe. We'll buy around each other down on Bloomberg Radio.
All right, Well, I don't have to tell any of you. This shares a video more than eighty percent so far this year, last year forty percent. Although our next guest is optimistic about the long term productivity potential of AI for business Carol, he says investors need to be selective and don't get carried away with the momentum enthusias.
Yeah, I believe that's Dock is the second best performing name in the S and P F.
What's the first super micro?
Right?
Yeah, another AI.
Play exactly exactly, But it hasn't been in the S.
And P five hundred all year, so we can't really No.
That's that's fair. But nonetheless, but Nvidio was the top performing name in the S and P five hundred last year. Hey, so let's get to it. Let's bring in our drive to the closed guest. Alan Lance back with us, director of research at Lance Global dot Com, President of Allan B. Lance Associates, joining us once again from Toledo, Ohio. Allan, good to have you back with us. Talk to us
about Yeah, nice to have you here. So when we talk about Nvidia, what do you think that there's more room to run or that you know that there's yeah, break it down for us.
Yeah, I think you know, it's going to be winners and losers differentiated much more so than last year. I think, like twenty twenty three, Apple was up when they had flat earnings and and really just rode that wave of the AI and the mega you know tech theme. But you know, this year, I think what we're seeing are the winners and losers. You we liked in video going into the year, and we liked Amazon and Meta and Google Alphabet and basically the two that we didn't like
was Apple and and Tesla. And it's really shown just the you know, the first three months of the year where in video is still I think cheap. I mean I would buy really fifty area or under.
If you would buy it, sorry repeat that, you'd buy a win like eight.
Fifty there, you know, like a week or so ago, and we were nibbling on it for clients that don't own it. We have a lot of clients that own all those and we sold some Tesla in the two hundreds, and we'll probably revisit Tesla if it continues to weaken. But you know, I think they are dealt with the hardest hand to him here, and and you know, Apple
is the second most difficult. The one we'd probably buy at the Magnificent seven or the former Magnificent seven would be Alphabet, just because I think they really watched the lots of Gemini, and I think they've got some good things to come. And they're going to do probably what Meta did and why we like Meta, and that's just cut back expenses and really focus on certain areas. And Apple's doing that. It's just going to take longer, and there's more certainty.
On that Magnificent seven there, you know, like we've been calling it Magnificent four, but on the Magnificent seven, JP Morgan about a month ago said Magnificent seven stocks are cheaper versus the rest of the equity market than they were five years ago, given their latest set of earnings, and they kind of put that out so they believe
that there was more room to run. Having said that, how do you kind of distinguish alan between getting caught up in momentum plays and just getting caught up in that euphoria versus really kind of understanding the fundamental plays, which is what you seem to be breaking down when it comes to a name like Nvidia.
Yeah, it's really the fundamentals. I mean, video is cheaper than it was a year ago, even though it's done so much as far as in the pre shation side, while you have a Tesla that's struggling in an Apple you know that hasn't shown growth and you know, multiple quarters so so. So I think that that's the difference. They all rode up in twenty three and now it's a matter of people looking at the fundamentals and and I think that's going to be the key areas as
far as into the future. Even as this AI plays out, there's going to be big winners and losers and and you know, you want to make sure you're in the right areas. Everybody's gonna be talking about it and saying that they have an advantage with it, but you know there's it's going to be few and far between. But that that's the biggest difference I think is just looking at the fundamentals instead of just momentum and technicals. Uh right, and you know, staying away from the higher risk areas.
Even in video. You know, if it continues to move up, you know we'll we'll start lightning positions, especially when when it's over concentrated, which it is for some of our accounts.
Hey Allan, I'm curious about Apple because it's down twelve percent so far this year. Our own Mark German out with a pretty cool story. I don't know if you've had a chance to read it.
Not so magnificent this year though, No, not no.
Like I said, down twelve percent, Apple's exploring robots as its next big thing after the car fizzles. Where does Apple need to go from here for you to get to a place where you could start buying and holding again.
That's a great question. I think another ten percent down we'd start looking at it again to buy for accounts that don't don't own it. I still think I love their you know ecosystem. You know, it's a great company. It's just a matter of there's a lot of uncertainty. They've got a lot of uh, you know, headwinds with China and and different things that they're they're trying to square away. It's kind of what we saw, you know, with with with Meta, you know when when they had
their their problems in twenty twenty two. And I think Alpha Alphabet and unfortunately Apple will have to go through that and the Apple I think the headwinds are even stronger.
And that I mean to be a year of efficiency at Apple Alan where they'd lay off thousands of people like Meta did. I mean, that's one way medicare.
I think Alphabet will be the first to start doing that, you know, in a major degree and start cutting back. But I think if you continue to see the results on Apple, we might even see it there.
But does Apple need to find a new source of revenue?
Right?
The iPhone has been you know, such an outstanding product for them, right and still the bulk of their revenues. But having said that, they scrapped, you know, after almost ten years. The car project we're talking about Mark German and is exclusive on exploring robots is kind of the next big thing. Do they need to in your view, they'll find a new source of revenue. I feel like we've been talking about this for Apple for a long time, and yet the Apple iPhone continues to.
Deliver exactly exactly, you know, and their service, you know, services really picked up, you know, with the apps and that you know they have some regulatory you know issues and and uh yeah they do that. That's one of the reasons we were you know, negative more negative on Apple and and Tesla, just because of the uncertainty. And you know, we can see the revenue sources with Matta, we can see it with Amazon and obviously in the video has come through with Flying Colors, But with Apple
and Tesla, I think it's difficult. They definitely need but you know it's unclear right now. And that's why you know, we wouldn't chase it, you know, from a standpoint of buying it, just because it's down from one ninety to you know, one sixty nine. I think you know, in the one forties, we'd start revisiting it. And if it looked like they're starting to do the right things, you know, like I think Alphabet is. Then you know it would be time to start accumulating in the weakness.
All right, Good to leave it there, Hey, listen, Thank you so much. Apple shares by the way, folks, just up about eight tens of a percent here in today's session. And a quick check on what Alphabet is up to. Alphabet is up just about two tens of a percent, So little change there, Alan, thank you so much, really appreciate it. Alan Lance, director of Research at Lance Global dot com, President of Alan B. Lance and Associates, Joining us once again from Toledo, Ohio.
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