Iger Returns to Disney As Chapek Exits

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube and now also on Bloomberg Quick Take. I don't know about U, Katie, but last night I about ten o'clock Eastern time saw in my email at a message opened it up all caps headline from the Bloomberg Professional Service, Bob Iger coming back to Disney after retiring Bob J peck out while was the only word that came to mind at some other choice where its came to mind

as well. But this is a big deal in the world of media. We've got Felix to Lette with us. He's Media, Entertainment and Telecom editor for Bloomberg Business Week. Is also the author of the great new book It's called It's Not TV. The Spectacular, Rise, Revolution and Future of HBO. He joined us via zoom from New York City. Felix, what was your first reaction when you saw this last night? It was pretty jaw dropping. I had to close my fantasy football app and you know, pay attention to what's

happened in the media world again. Um yeah, total shock, surprise, excitement. This is just a totally wild move. Um And I think underscores what a crazy time it is in the entertainment business and how challenging and tumultuous this transition from the cable era to the streaming era is going to be for pretty much every big player in the space, including Disney. I'll admit I was asleep at ten pm. You got an early morning. I was resting up for a big day of reporting for Bloomberg News. But uh

so you described shock. Was anyone expecting this or was this across the board shocking? I think that there were definitely people calling for a change at the top of Disney, particularly coming off of this last quarter, which was really truly a disastrous quarter for Disney. Um And I think shapeck performance during the earnings call, uh, left a lot

of people scratching their head. You know, the Disney had announced this one point five billion dollar loss on streaming for the quarter, which was you know, way bigger than people thought it was going to be. And yet SHAPEC was really cheerful and sunny during that call. And uh so we think in one sense, people were thinking, Okay, maybe this guy is in over his head. There's been all these series of missteps. There was, you know, his clumsy handling of the culture War issues down in Florida.

There was this dismissile of Peter Rice, the head of television, earlier this year, which upset a lot of creative people in Hollywood. Um. You know, so there's been a series of airs. Um so, I think the decision to move on from SHAPEC, I think is not that shocking. It's really just the bringing Eiger back, um, you know, replacing

his hand chosen you know, pick to succeed him originally. Uh. You know, for years, every time he's been out in public, people have asked them about would you ever consider coming back to Disney? And he said again and again and again like no, I'm not interested. I'm not interested. So that part of it is is pretty wild. Never say never. I mean, Bob Iger seventy one years old. He was was at Disney before he quote unquote retired more than for more than four decades. He was its CEO for

fifteen years. He oversaw some of the biggest acquisitions that the company made, including Marvel, Pixar and other acquisitions. So, Felix, what does it mean for the future of Disney and what we can expect over the next two years, which is from what we understand, uh, what we'll see with Iger. Yeah, I mean, I think the argument for bringing him back is this guy had a fifteen year run that was seen as this incredible uh time for Disney, this great

series acquisitions he made. And you know, we're at this point in this transition from cable to streaming where everybody is suffering because the linear networks that was making everybody profits are you know, continue to decline very quickly. The streaming services are essentially these huge giant holes of money at this point of people are just shoveling money into them. They're still not profitable. Um. So I think it's a time when almost anything could be up for um for sale.

I think we're going to see more consolidation space. People are going to have to team up further in order to survive this era. And I think the argument for bringing your back is you want that guy uh making those big decisions over the next couple of years, um, and you know you have some faith that he's going to make smart moves. Well, Wall Street is definitely cheering both of you. Look at the shares also at least

one upgrade on this news. But tell us about the potential fly in the ointment here the activist investor Nelson pelts his fund. What could potentially go wrong here? Yeah, I mean I think that there's plenty that could go wrong. I think, um, you know, part of it is again the funny. The thing that's kind of funny to me is like, you know, I kept pushing back his retirement again and again during his previous reign, and he kept, you know, there was all this speculation about you know,

who are who's going to succeed you? Or do you have a leader in mind? You know, who's going to carry this future company into the future. He really kept running off potential candidates, um, and then in the end he picked this guy Shapebeck, who left everyone kind of scratching it has why do you do that? Um And now you know, on the one hand, it's great that Iger's back to deal with whatever acquisitions they're gonna have

to make in the next couple of years. On the other hand, now he's back in charge of picking another successor for the future of Disney, and it doesn't give you a lot of faith that he is very good at that process. Um. So, I think that's going to be part of the challenge that all investors are going to be looking at, like what is the plan beyond

these two years? That's certainly the question that many people are going to have it at least, as you mentioned, Katie uh And you pointed to Disney shares up more than five percent right now, and they were high as high as nine point nine percent earlier in the day. Felix Gillette Media Entertainment telecom editor for Bloomberg Business Week. He's the author of the great new book just came out earlier this month. It's called It's Not TV The

Spectacular Rise Revolution in Future of HBO. Joining us this afternoon via zoom from New York City. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. We've talked in the past about what it means for people who have been laid off from some of the biggest tech firms. I mean, we're talking about companies like meta platforms, Uber, Lift, Salesforce, Stripe,

and more. And we talked about it oftentimes in the context of what it means in the bigger picture of what it says about the economy. But there's a different way of looking at it that's really important, and it has to do with people who hold H one B visas and what they're doing if they've been laid off. We've got Sinduja Rodnegrogen on the phone with us. She's

senior investigative data reporter. Actually, she joins us via zoom from San Francisco for a Bloomberg News You can read her story right now on the Bloomberg terminal and at Bloomberg dot com. Slash business Week also with us as Joel Webber, the editor of Bloomberg Business Week. He's with us right now in the Bloomberg Interactive Broker's studio. So, Joel, how how should we be thinking about these layoffs? Well, one thing that really UH struck me with UH. Saint's reporting.

UH and companies reporting is about H one B visas and H one B visus have been uh something that the magazine has written about before. UM, skilled workers that have largely been in the tech industry. UH from a rod and you're we're talking some pretty incredible stories about where a lot of these people come from. But the tech industry has really benefited from this workforce. But what's

what's interesting is effectively it's a company sponsored. So the moment that any of these people get laid off or fired, it puts them in a really difficult place. A lot of these people end up with mortgages, childcare, all kinds of stuff because they're you know, banking on a on a future here um oftentimes putting permanent residents residency in

motion at the same time. So, so Sin brings us inside this having having seen this data, how significant of a hit to the tech industry are these firings having as as it puts a lot of these people in jeopardy. UM, So this is a very interesting question. So it's like hundreds of employees we know have been laid off just

from Twitter and Meta. I think around three fifty. And I want to say it's an under account because we're looking at people who have been posting on LinkedIn, putting their name out there in a crowd crowdsourced spreadsheet or something saying hey, I'm in need of a visa sponsorship them.

You know. Overall, like when we did our analysis, we realized just with like six companies you know that have been recently doing the layoffs Meta, Twitter, Amazon, Stripe, Salesforce, and um Um and Left, we found that they just the six of them employee sixty forty five thousand um

H one B workers. That's an estimate we look, we created based on our our data analysis and just between Twitter and Meta, we found hundreds of people who claim to be visa holders who have been um um laid off in the in the in the last few weeks. So it's a pretty significant number, you know, and it's

in the hundreds for sure. As you and our colleagues Brody Ford and Katrina Madison right, people who do hold H one B visas who then become unemployed, they can only remain in the US legally for sixty d is without finding new employers to sponsor them. Do we know anything about the terms that these employees are given when they are laid off from companies because they faced this special circumstance, Like are they given better terms because they're

on this kind of timeline here? Yeah, I mean, I think you know, that was the interesting thing we found while reporting the story. You know, we started out thinking of the story is like a human story. You know, what happens when you have this few weeks a few months of deadline and you're trying to scramble for another job and visa sponsorship. But what we realize is that some companies are doing better than others in terms of how they treat their immigrant workforce and what policies they

lay out. For example, you know, we found that Twitter sort of didn't give a lot of assistance or support to these employees, and some other companies have like a

little wealth out slightly better thoughtout policies. So for example, you know, your sixty day clock starts sticking after the last day that you've you know, worked there, So if you could extend that last day, you know, if if there's like a notice period given that you're going to be laid off, but after two months, so that gives like people four months, you know, two months when they're working at that company, and then UM an additional sixty days.

So if that can be a form of relief and as opposed to saying, you know, you're later off today, Uh, and then you know we're going to give you severance for three weeks or whatever or eight weeks or something, and then you know your clock starts right now. So that extension of time is really important. And you know some companies, I think Meta has done that, particularly for immigrant visa holders. Lift was another one. Um stripe when

they wrote that email. I don't know if they offered a notice spirit, but they know definitely acknowledged that this would be very difficult for immigrant visa holders. And Twitter, you know sort of they didn't think through as much based on our reporting, and yeah, and there was there was, you know, the and when employees wrote to them, they many of them were really confused about you know, when does my clock start ticking? Does it start the day

of January four? When you know you've said that that would be our last day? But you know, we're not productive, We're not on the are we on payroll? Are we not? And you know, like, uh, is it going to be a member for them. So there was like a lot of confusion amongst employees and they got very little guidance, very little like immigration one on one counseling or even or even you know, um, anything that says more definitively yeah, this is the day you need to this is your

last day, or that is your last day. They just said, you know, you should consult your own immigration attorney. So I think, you know, employees, that's like the least you could do for this workforce if invested so much time in this country, like you mentioned, and you know, at least give them like the most they can get so they can like succeed in finding that job, especially now at the start of a place when a lot of tech companies are instituting hiring freezers and holiday season when

things slow down. So you know, the more you can do for them, the better it is for them. Okay, So we I want to talk a little bit more about the Indians, because there there are a ton of H one b h A visa holders from India, uh many of them. As we were writing this story. I've been here for for years, and it seems like it's really hitting that country hard. These numbers right, So whom did you talk to and what do you learn from

on the India quotion? I think you know, um a lot of people who come on H one B V. So it's like you mentioned drole, like the the goal is to eventually, you know, get permanent residency and citizenship. And for for a lot of folks like you know, you you stay on H one B for anywhere from three to six years. Your company starts working on your green card application, they file it and then you get your green card and you know, I want to say anywhere between one year or the three years or something

of that sort. But with Indians and actually Chinese nationals like you file that green card and there's like a huge backlog because there's this rule that says that you know, you can own every country is allowed to get only seven percent of the green card and Indians and Chinese being a huge part of the tech force, have you know,

immigrated on this reason larger numbers. So you know, particularly for Indians, you know, there are seven percent of the green cards reserved for them every year, which comes to around ten thousand green cards, and then there are five hundred thousand, uh nearly five hundred thousand um. You know holders who have applied for the green cards, so that so only ten thousand will keep getting every year. And

the backlog is huge and it's growing. So you know, if you live for your green card today or if you applied for it in then the sillery could take as long as you may not. We unfortunately have to leave it there. Sindoja ranaj and Uh senior investigative data reporter for Bloomberg News. To be assume from San Francisco. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. We're to welcome

in once against Sheen contractor. People listen to the program are familiar with her voice. She's E s G analysts for Bloomberg Intelligence. She's with us once again in the Bloomberg Interactor Broker Studio, fresh off of her recent trip to the Conference of Parties twenty seven. That's copy as it's known. She good to have you with us this afternoon. You just got back from Charmel Sheik, Egypt resort town. I know you did a lot of working there and

not resorting. Okay, maybe some resorting, maybe some vacation. I hope you had some fun. First of all, what was cop like? I know this was your first one, so Tim Cupp was like nothing I've seen before. It was, you know, this two week conference where forty people just descent to talk about climate. I don't think I've ever been in that kind of environment. It's like very focused and there was so many interesting discussions, so many different things,

especially around two things in particular. The first was really carbon markets. There was you know, people who were great supporters, there were people who are great sort of disbelievers. And the second one was around companies corbon reduction goals and the need to sort of just go beyond just paper de carbonization. I guess tell us about that debate there on carbon what is sort of the rallying cry for

the advocates and what are the non believers saying. So when it comes to carbon markets, the goal is for companies to basically offset their own emissions by purchasing these credits from projects that remove common from the atmosphere. And basically the goal there has to be that sort of the price of carb and the cost of carbon has to pay for that additionality sort of without that the project might not have been viable, which makes it sort

of an additionality. The the people who are against it believed that a lot of this money is going to go to works projects that are already financially viable. It's like, you know, a renewable project where it's cost competitive, it's going to be built anyway, there's no additionality, So the money is really going to nothing, I guess. So it's basically the point that you have to fund a project

through offsets which otherwise wouldn't have existed. Okay, Well, you cover E s G for Bloomberg Intelligence, and a big part of your trip, of course, had to do with the way that you're writing reports about what you learn there and what investors can learn from the way that you know SG is being talked about at events like this. What's a big takeaway that you have for the Bloomberg

Intelligence audience. So the one thing is, and I've said this before, but before God this year, before last year, companies are setting these Gorbon reduction goals at a pace we've never seen before. There were quite a few interesting talks that happened around actually sort of implementation, Like the UK, for example, had this new proposal during COP where you know, if a company has a goal, they have to have a plan on how to meet that good. I think

that's the biggest takeaway. Even in our research, we find that out of the companies we've looked at, about eight have gobbon goals. But what do these actually mean? It's a huge gap. Yeah, I mean this is something I always think about, like how do you factor in goals such as that one when you're you know, thinking about

a company's E s G score. Yeah, So that's sort of interesting because you know, when carbon is material, like for sectors like utilities, really sort of environmentally heavy sectors, that's when actually having a goal could have some kind of financial impacts. I think it comes down to materiality, what are the sectors by carbon matters, and how does

it actually fuctor into your financial performance. I want to talk bigger picture COP because you were there and I haven't gotten to speak to many folks who were there. Does it do you leave with the impression that it's useful to the extent that all of these countries are going to leave and go back and work to reduce carbon emissions so we ultimately see a reduction in climate change. So Tim, I'll be honest. You know, before I went to this, I was really skeptic. I was like, why,

what is the point of gathering? Blah blah. But then I spoke to a negotiator there and he told me one thing. He said, you know, shying, think back to Tift right. No, no, country don't net zero gulo had anything really to do with what sort of climate ambition. But look at where we are today, about a hundred and thirty plus companies have net zero goos. So you're to your it's kind of frustrating, but over the big picture, we've we have achieved something I guess and compared to

business as usually if you think about it. So I feel better now we're talking about it. Yeah, exactly. See. Are you optimistic? Are you going next year? I hope? So I don't know. Are you optimistic though, just in the last thirty seconds that we have I am? I am? I think you know, given what companies are doing, given what countries are saying, given some of the things we've seen, I think I definitely am. Well, welcome back and thanks

for sharing some of your experience with us. That Shaheen Contractors. She's environmental, social, and governance analyst at Bloomberg Intelligence, fresh offer trip from Charmel Shake where she was there for Copy seven a journal. Yeah, I'll bet you. Let me drive. Oh no, no, no no, no, honey, please, I'll do the bride revels. I want to drive. It's good question. Drive. This is the drive to the globe up on Bloomberg Radio.

It's that time, already less than ten minutes to go to the end of trading here on this Monday, November two, Tim Stantovick and Katie Grydfeld relive in the Bloomberg Interactive Brokers the studio. Let's get to our drive to the close. Guest Eric Clarks, portfolio manager at Rational Dynamic Brands Fund. He joins us via Zoom from San Diego. Eric, good to have you with us. How are you, hey, Tim? How are you We're doing well. Thanks, It's good to have you back with us. Um, So help us understand

the way that you're viewing the markets right now. We're getting to the close of the year, sort of the final sprint to the end of the year. It's a holiday week. We're seeing volumes down right now versus last

twenty days on the SP five. How does the year end. Uh. You know that one's a bit of a toss up, to be quite honest with you, because we have tax laws selling, you know, at the end of the year, but we also have prices coming down to what I consider to be much more attractive than we've seen in in a number of years. And so you know, it's anybody's guests on the timing and when people do their

tax laws selling. But we've certainly already done all that stuff, and now we're trying to pick away at some of the opportunities that tax laws selling is gonna is giving us the kind of right off the rest of the year then, and trying to you don't even have to come in, Katie, Okay, that's what I'm trying to get. I have been hearing more about tax as harvesting and

what a brutal year. But I want to bring you into a debate we we're having at the start of the program about the consumer because we're going to get a lot of black data or Friday data on Friday after Thanksgiving. Uh, we know that the consumer is still strong here when you see headlines and economic reports to that effect. What is your takeaway is that bullish or bearish for you when you think about what the FED

is trying to accomplish. Well, I mean, listen, that the FED is a whole different story that we could probably spend a lot of time on. But from a consumer, you know, when we are starting to feel squeezed, we start to make different decisions. We start to play that this versus that game. What do I need to buy? Even if I don't love the prices that are higher? What do I have to buy? I gotta keep doing that?

What can I defer maybe for now if I'm feeling the pinch a little bit, particularly towards holidays, and you want to have good holiday spending. So I think we're in that period of consumers just making a decision about what to spend on and where to go, and which brands are the most relevant. I mean that that's where we we spend all of our time on brand relevancy. So so we feel like that we we have a

good expertise in that area. But clearly the consumers, you know, feeling the pinch a little bit with prices being up literally across every category that we see. Okay, so that's the perfect segue to talk about what you're concerned with, and that's an earnings recession? Did we I mean, given what we've heard about from companies that have reported already, and we still got zoom after the bell, but we're pretty much done with earning season. Q four is not

going to look great for a lot of companies. Amazon, for example, already gave us a heads up about that target as well. What did what did you see? And what does that portend for Q one? Well? I think the thesis is the next shoot a drop is earnings will start to reflect all the things that the FED has done, and that slow down will be here. My problem is, you know, the valuations have been reset so much already. Who knows if it's a full reset or a two thirds reset whatever the numb briz. I suspect

we have an earnings trough for the year. You know, probably reported in the April quarter, and historically markets bottom three to six months before earnings and and GDP, etcetera. And so you know, if we're in late November now, where you know the market probably has fully discounted or at least you know, almost fully discounted the earnings recession that I think everybody expects. So does that mean we've hit bottom. Well, I I don't know that we've hit bottom.

That it's that's above my pay grade. I'm trying to find the right price points for the brands that we love. It's really hard. I think, you know, Michael Symbolis from JP Morgan put out a report. I think that thirty on the smp IS is a reasonable place to go.

It doesn't mean we have to go there. Doesn't we stay there, But I think if we get to that level, you're gonna see some you know, multi year wonderful buying opportunities, and sentiment is probably gonna be dreadful if we get down there, But that's usually when the best buying opportunities happen when it feels bad. All right, Erica, want to get specific here. I want to talk about the brands,

the names that you're excited about. What are you looking at? Well, I mean, we focus on a lot of trends, and so some of them are consumer trends, and that's not just buying and selling of goods and services. You know, I love, we love this mega trend in alternative assets, people migrating a little bit of money from stocks and bonds into alternatives. Regal assets, infrastructure, private equity, all those things. Black Stone and k K are the two biggest. They

are fairly cheap. Now. The stocks have come off pretty meaningfully this year. I'm looking for really good snapbacks in three within regular consumer spending. You know, I still like the the at Leisure, the Lulu Lemons, and the Nikes. They've cut down pretty meaningfully. We still like the home I know, there's you know, home sales have have cooled off pretty dramatically with the Fed actions and mortgage rates rising. That just means that people are going to stay in

their homes rather than move. And so I'm not surprised to see home Depot and Low's still do pretty well. You know, inventories are up a little bit, but pricing powers is really strong. Eric, Tesla is on your list as well, thanks to the notes that you sent our producer Paul a little earlier today. I'm I've got Tesla's one of my decliners today. It's down to what another close to six percent six and a half percent right now, um, down from when Ellen's deal for Twitter clothes. Why are

you bullish on Tesla? Well, we we sold it much higher ago and we just started nibbling literally put a pinky toe in the water a little bit higher than where we are and and we'll start to it's the smallest position in the fund. I just you know, right now, the distractions that Ellen has had with this Twitter I think are providing long term opportunities. And so I'm going to be very slow and methodical to put money into

Tesla as it declines. But anything on her I think one fifty, you know, one between that level, I think are pretty good places to to to add to that name for the long term. But it's been a it's a teeny tiny port portfolio position right this minute. That this is really interesting that the Tesla discussion, that Elon Musk discussion. I mean we hear all the time as a bear case for Tesla that you know this is Elon Musk is a distracted CEO. Obviously he spread very

thin with the most recent Twitter fiasco. How much of a concern is that for you? You say, this is a long term sort of nibbling that you're doing, But how do you factor that concern in? Well, I I think that he is getting the message. But let's use Disney as a good example. You know, Bob Jpeck probably wasn't the right guy Bob Iger's coming back. Ellen said he hates managing day to day business. That's not for strength. He needs a Tim Cook type up Garador to run Tesla,

and he probably needs one to run Twitter. Let him be the kind of the chief chief information or innovation officer that's really He's just doing too much, and I think he finally realizes he Eric, we gotta run. Unfortunately, got to get you back. Eric Clark, portfolio manager at Rational Dynamic Brands Fund. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com.

You can also listen to our radio show at two pm Eastern on Bloomberg Radio, or watch us live on YouTube and now also on Bloomberg Quick Take