Disney, Crypto, and Twitter (Podcast)

on a Bloomberg Interactive Broker studio, and keithan Ranganathan. She is the senior media analyst for Bloomberg Intelligence. Keith, I want to start with you. What do you think is kind of job one on Bob Iger's to do list in his return to the CEO spot. Yeah, thanks, thanks Paul for having me. So, I think job number one is kind of really re examining scrutinizing the streaming strategy. Obviously they've done really, really well when it comes to

subscriber numbers, but that is not the focus anymore. It's all about economics. It's all about stability, and we know they've had some huge losses in the streaming department, and it looks like they're going to lose another three billion dollars this year. Um So, unless you know Bob Eiger goes back to the drawing board, uh sees exactly what needs to be trimmed, whether it's marketing expenses, whether it's

a whole real realignment of the content strategy. I think that is the number one item on us to do list, Jinale, What are you hearing from your contract contacts on Wall Street? What what needs to be done? What needs to be done? Well, they have two activist investors here that has a lot of suggestions and what they want to do, and they might take more of a stake. According to Wall Street journals reporting Tryan in particular, they might want to expand

their steak as well as seek a board seat. Tryon has how much? I heard they bought an eight hundred million dollars worth of stock, but this is an eight billion dollar company. So and you were asking, I just did some quick backup a manible maths. When you look at today's stock price, Bob I. Eiker himself has about ninety million worth of shares, so and again that his declined significantly this year, so and he might own more than that decides what's publicly disclosed, So what will now

third Point also want. They also have a small steak as well. Remember these are not steaks that are big enough to immediately cause a lot of change, especially in Kias. That's like ESPN that initially there was some change wanted in terms of monetizing more of what we've already seen. But remember, Bob Eiger, to your point on the Wall Street perspective, this is one of the most beloved CEOs across Wall Street. This is somebody that bankers, investors fall

over themselves for. But a guy in according to the Wall Street Journal report, Tryan in particular, doesn't necessarily want him there in this capacity. You know, Shenalie just brought up the ESPN boy, there was a time and you and I remember not so long ago when this was the profit driver for the entire company. Now with cord cutting not so much, what do you think Bob Iger and the board are thinking about ESPN. I mean, this

is a real head screature, Paul Um. You know this is Yes, it is the profit over It continues to be a huge profit driver though let me it's still is generating about four points three billion dollars in Ibada every year. The problem, though, is that the revenue is shrinking rapidly as you have more and more court cutting, and Bob Iger himself just recently said that, you know, courd cutting has reached unprecedented levels, and you know, there might just be a point in time that comes very

soon when you know, the switch finally goes off. But at the same time they have so they have the shrinking revenue base, they have subscribers going away, but they have sports rights. Disney by far pace the highest sports rights in the media ecosystem at nine billion dollars every year.

They have an NBA deal that's coming up. You know, there are all of these different sports rights that that are coming up for renewal where we've seen like huge, huge increases in rights fees, you know, thirty So it's gonna be interesting to see exactly what bob Iger looks to do. Does he make that shift finally, that that big jump into streaming kind of pivoting away from the

TV ecosystem. But then again, it's gonna be a tough balancing act because, as I said, you know, the suite of networks does bring in more than four billion dollars. But what do you mean? I mean ESPN They already have ESPN Plus, right, but I still if I stream, if I subscribe to ESPN Plus, which I do, I still can't see all the games. Yeah, that's exactly what it is. So ESPN Plus is kind of this watered down version with like more like second tier sports content.

All of the market properties are on you know, the main TV networks, right, whether it's uh, you know, the NFL, the NBA, really all top tier properties. And so the question is, you know, do they kind of kind of finally take that step and move everything to uh, you know, ESPN Plus and then obviously bump up the price pretty significantly as well. Please please Dear God that there are other things that Wall Street has wanted from this company.

You know, I'm looking at Third Points initial letter, and they wanted the company to use free cash flow to pay down debt more meaningfully, repurchase shares and suspend a cash tive and and as far as streaming goes, they really want them to work faster and harder to in Great Hulu into the Disney Plus platform. So it's not just ESPN streaming it's Hulu also, which has been you know, a long prized asset that of course Comcast had that

stake in as well. And I think there there are a lot of things here that Wall Street wants them to do, and we did not see them happening too quickly. That we did see some movement towards these things under shape that I will say that if you on the Disney screen d I S Equity go. If you type d d I S go, you can see how much debt they have coming to you about forty five billion dollars over the next thirty years. So that could be reshaped if you pull up a cop screen. See this

is what we like to do. And look at Disney versus Netflix and Amazon. They have drastically underperformed the others. Amazon you can tell me geth okay, they have this big cloud business. I get it. Or you can order stuff from them online. I've done it. Netflix, what do they have over Disney? Do they just have better content? I wouldn't say it's better content. I would say Disney are combly has the best content in the media business. But Netflix now is a pure place story right It's

and and investors like that. Wall Street likes that they like pure play businesses where it's an uncomplicated, clean story. With Disney, you do have a lot of exposure to the linear TV business, and we know the linear TV business isn't secular decline and those headwinds are only mounting. So that's something that investors really don't like. Alright, great stuff.

As always, our go to a person for all things media, Geith wrong Enough, and she is the senior media annals for Bloomberg Intelligence and Shinnelli Bassa giving us the Wall Street angle. Why because she is our Wall Street ace here at Bloomberg News bringing it all together here around tabling it. I'm still on Twitter, but I don't know. I could dump it tomorrow and that I'd just find

them off Facebook. I feel like a lot of people I thought that a lot of people would bail on Twitter for you know, ethical reasons, because at least the people around me that I fall or who followed me I feel like, are pretty left leaning, um and not libertarian in the sense that Elon Musk is, and a lot of them seem very angry, you know, about the takeover from Elon, but at the same time, um, they're just addicted that's I love the meme that Elon Musk

posted today or yesterday, um with lois from Family Guy, who, by the way, is one of my all time favorite cartoon characters. And she's looking at this bottle of prescription medication and clearly shaking because she wants to grab a pill of Twitter, you know. And the idea is that's what Donald Trump is doing, man deep saying he covers all things tech, and that means, for better worse, he covers Twitter and all that kind of stuff in the social media platforms. What do you think is going on

there with Twitter? I mean, is this a viable business? Can he support the debt? Is this he gonna get ugly? I mean there were rumors a couple days ago that this thing would go dark. Well so clearly with you know, him having laid off about seventy eight percent of the staff, and we don't know whether the infrastructure, you know, and the back end people who really make sure that the app and website are up and running are still there.

Like Look, when you do mass firings like this, the real risk is you don't know who is critical to your development velocity. And if he has figured that out, great for him and you know things will be fine. It seems like not very many people as the answer that question. I mean, if you say he fired seventy of the staff and it's working fine so for now. Yeah, but I mean it's been days and days and days

with millions and millions of users. This is the thing what I've learned from the smart people like men Deep and others in tech. You have to iterate every day. I mean, how many times you go on the LinkedIn You're like, oh, that's new, and you have to have that every single day. And I'm guessing, okay, maybe they will we stay five but so you have to assume they cut us aside. Answer that question, especially for listeners who may be trying to connect to me on LinkedIn?

How many times do I go on LinkedIn once every three or four months? But Twitter? Twitter once every maybe three or four times a day? Yeah? Yeah, okay, there you go. Well, So look, I think in terms of the usage, no one questions that. You know, Twitter is a unique platform, and I think the competition risk is low. So even if you know there are all these things going on, and he has brought back uh formal president

from and some people are happy some are not. But at the end of the day, the platform is addictive and there isn't an alternative. The key question is is it a good model in terms of what he's trying to do with subscriptions, blue checks and all the changes that he wants to do with the company that is smaller than it was in terms of headcount. So how do you drive all these product changes when you get rid of so many people. Maybe he has a pulse on who the right talent is to, you know, make

these changes, but I don't think so. In like, if you're cost cutting, then your focus should be cost cutting. If you want to expertise product avelopment velocity, then that should be a focus. You can do both simultaneously. You know. It's funny as you say that, I'm thinking about Disney because I was reading in the story last night and early this morning. What they need to do is cut costs for the streaming business and also boost subscribers for

the streaming business. So and maybe even the price right, so they want to pay less for the product that they're selling and charge more for it. Is that possible? Well, look, anything is possible. I don't know if Disney's in your Wheelhouse. We can't have woken up without you know, getting into this story, right. Yeah, but look the end of the day, for one thing you have to make sure is you have the right people in charge. For the most time, we kept hearing like Ellen isn't gonna run Twitter. Now

it looks like he's the one who's doing it. He's not bringing anyone externally. So I think to me, there are a lot of question marks around the vision. If you have the vision, if you lay out the vision and you're executing towards it, I think you get everyone on board. In this case. I don't know if there's a vision and every day it's something new, yes, you can, you know, talk about stuff, but to execute on it, you really need to, you know, have a vision. And

I think that's what's missing here. You know, I'm looking at the Bloomberg Terminal, the f A, and the most recent estimates for Twitter before it's taken public private a billion dollars a billion too, and there's like thirteen billion of debt on there, if not more. That's a lot of leverage thirteen times. I mean, that's even before we had some of these advertisers pulling back. That's the exactly.

So from my perspective, they're they're already down almost in terms of the advertising revenue because a lot of advertisers have pulled out, and the reason is brand safety, because they have gotten rid of all the you know, people moderating content. Brand safety is a big issue. So I wouldn't be surprised in the near term they lose more advertising revenue and they can offset a little bit of it using the lower costs because they have fired sev

of the staff. But net net, you're not gonna make a big jump in even dug growth because this is gonna be tough. And remember those fixing up people want their money back. It's strange. Alright, let's talk about the streaming business, because it turns out it's easier to get subscribers. It's a little bit harder to make money off of those subscribers. And for the Walt Disney Company, it was such a big deal that they made a big change at the top, bringing back to Bob e to b

CEO for a couple of years. I'm gonna have talked to Mark Douglas. He's smart on all this stuff. He'st president and CEO of Mountain Mountain is an advertising software company enabling brands to drive measurable conversions, revenue, and site business. Hey, Mark, it turns out I guess that again, a lot of these streaming companies are realizing it's hard to make money. Maybe we need to think about advertising. What did you make the news at Disney today? Well, I mean it

was I think a shock to everyone. I've talked to folks at Disney as recently as the middle of last week, and if they had any idea this was about to happen, they did a very good job of hiding that. So I think it was definitely shocking news. Um. But you know, these are um challenging times in the television industry, mainly because there's a lot of innovation, a lot of change.

And so if you have a track record of managing large companies but haven't had a track record and and I'm not saying of you know, essentially innovating while doing that, you're that's probably gonna be a real challenge for you. I don't know if that was the case, um with the person Bob is replacing, but I think Bob Iger

definitely has that track record, and that's why Disney needs them. Well, I mean, you need to, as the CEO of a company that's worth when Bob Iger was running it, you know, two hundred billion dollars, not only innovate and make money on the products that you're developing, but also somehow take care of succession. Right, you can't just leave with nobody good in charge, or at least two people good in charge. So the idea is that Bob Iger leaves shapec is

a successor. Shape is not good enough, and now they have zero bench, there's no one else to choose from. They have to call Bob Eiger back. Isn't that crazy? Well? I may, that's one way of looking at it, But I think also, um, look a lot of you you have a lot of things have changed since Bob left. You have Netflix and Ring the market, Disney them in terms of bad supported streaming, Disney themselves announced with Disney

Plus they're going to be doing the same. You have Apple actually a lot of rumors about Apple um about to do the same. Um. Just the world has changed in terms of the economic conditions, and so you know, it's it's when you have someone who has this fifteen year track record, knows the business. Sometimes you know, you go back to the bench, so to say, and that's

what they did here. I get your point completely, but I also don't think it was a it's a bad choice to say, Look, let's let's go with let's let's redo this, let's do this one more time, two years, line it up for the future, and then, you know, hopefully be in a much stronger place at the end of that. Mark, what if you left Mountain, what have you found something else? Maybe you want to dedicate the rest of your life to charity, so you give it to Ryan. Ryan Reynolds takes over. He makes it maybe

a year and a half too. He's no good. You can't do the business. It's just a pretty face and reads a script. Do you got a plan B for that? Someone else gonna take over? I the least, don't pass along that description. I don't think Ryant that's a pretty face reading the script. But the and but I'll make sure he knows that you said that. Okay, all right, but you do look at the case of Salesforce. Totally

different company, it's totally different industry. The only people most people know that um Mark Bennioff left, you know, did that he left the company? At that he had built and went off and did something else and wound up and left some very capable people in charge. But he wound up coming back. And that's what we're talking about here, that DNA to build and to see the opportunities and to be willing to take the risk that is very,

very hard to find. And when you have it formally as your CEO, and now as as you know someone that was on your board and that person is willing to come back at a critical moment, I think it's always going to be the right choice. And it was the right choice for Salesforce, It's probably gonna be the right choice for Disney, and those are not the only

two examples of that happening. Yeah. Well, Mark, I've covered this stock for thirty years and in my take today as I read this was this is not a victory lap for Bob Iger. It's an admission that his succession plan was a complete failure. He had a great he had a great one at one point with Jay Russulo and Tom Stagg's, but he blew that up as well. So here we are, Um, he only has two years. I think one of his top jobs, in addition to

fixing the streaming is to find a successor. I mean, I wonder if they're gonna go external, internal, any thoughts you're hearing the well, I think I think that's not his first priority. I mean, this was announced yesterday. Today is his literally is his first day back. I think the first priority is vision where they want to be. Um, there's a lot of people who left Disney and very see in your roles who um, I wouldn't be surprised if they came back also, um who left over the

last year or so. So I think it's first, what's the vision. Let's make sure we have the right team execute on that vision. And I do think that if you're Bob, you you are looking at the situation and saying, look, we want to make sure that twenty four months from now, UM, when we do this again, that we have what's you know, really the companies in the right place and the team is in the right place and and and learn from that and that that I think that's what's going to happen.

But you have to just keep reiterating you you can't lead a company. Leaders have vision. Leaders have are fearless and and you know, and they know where they want to go. And that's that's task number one. And and what about Mark? What about I feel like there's so much they've left on the table in terms of the stream business. Right, I have Disney and I have Hulu, and I have Espn Plus, and I still can't watch the games that I want to watch. I'm not gonna go back to cable um. Like a lot of people,

I just want everything in one place as well? Is that? Am I the only one who wants it that way? Are they smart to have, you know, ten different apps for their content or do they need to make a change there? Well? They I mean they're they have a really good lineup of assets here. Hulu gives them live con excuse me, gives them live content as well as

original content. They have Disney have ABC, they have Espn, they have the Disney Plus, have Star I mean literally I was watching the latest Star Wars last night, So, I mean they have an incredible bunch of content. The other thing I don't think most people think about when it comes to TV in general, it's under monetized. Then more people watch television than use social It has three times the engagement three hours a day watching TV For the average individual, an hour day on social media, but

somehow makes less money. So this, this is a business that is primed for, you know, to really expand the monetization move beyond just upfronts. From monetization, really moved to capturing more revenue with the with that triple that engagement. And so I think you're gonna see a lot of consolidation and content business. I think companies like Disney, you're gonna figure out how to monetize them much more effectively. Bob is on record talking about them in the past.

And once you monetize them more effectively, then you're gonna look to buy more content more TV networks. So this is gonna be an exciting two years. I think this is kicking off a wave of a lot of changes in the business model and consolidation in terms of TV networks. All right, Mark, great stuff, and you want to talk about an under monetized audience, I'll give you over the air radio. Mark Douglas, President and CEO of Mountain joining

us onto this Disney News. I want to get right to our next guest, Michael Nathanson, Founding partner and senior Research Annel set MOFA at Nathanson and Folks he is just one of the top voices on Wall Street covering the media industry. He knows all the players. I want to get his thoughts here on the Disney news. Mike, thanks so much for joining us here. When you saw the news, What do you think here? What do you

think is going on at the House of Mickey Well? First, if it was a joke, Paul Um, I thought someone who was playing a joke on me. Um. After realizing it was real, I don't know if you can hear this, lens alligned me breaking out, But if I realized it was real, Um, it made sense to me. We have these you know, been a doubt about streaming economics. We thought that that Disney strategy RESI the streaming had changed

a lot. They had gone broader and moved away from kind of their tent poles, And it made sense to me because we had not recommended Disney. We think the losses and streaming a way too large. We thought the company was too optimistic about their businesses ahead. I think Bob brings a real clear eyed view of what they have to do to kind of fix their company. Isn't there anyone else in the d and nine thousand employees at Walt Disney. I mean, this guy is uh, you know,

seventy one. He's retired for a couple of years now, and he picked his own successor. Um, don't they have, like at two billion dollar companies plans like with a third string guy and a fourth string guy. Yes. To be fair, the bench that was in place when Bob made the decision had been hurt by succession planning that went awry. Do you remember they had picked Tom Staggs to be the CEO and he left and they had

a bake off for that job Jay Rozzulo. So they had a really strong bench that they were building towards succession planning, and that bench became weaker Uh as part of the planning. I don't think there's anyone who has the too Bob Brings is. Bob brings the level of success. He's able to look look things honestly and share bad news, and I think when you're a new CEO it's really hard to communicate bad news. He can share bad news with us, the bad news being cord cutting is running amuck. UH.

Streaming will not be profitable. The company needs to generate more cash flow, and I think I think you know, it takes someone with that type of success and experience to be able to deliver bad news and then radically make changes. And streaming isn't profitable. Michael, What why do we want to own this stock? Is it because they have an awesome cruise line business? Is it because every family in the country has to take um their kids

to the parks at least once? Um? But I mean, what else do they have If it's ESPN, I guess is fantastic, But you've got to have cable, and who wants to have cable anymore? Right? So so let's let's let's look at there's there's three pieces to the puzzle. There's the park business, which is a great business that um generally you know, a ton of free cash flows managed really well. That business is exceptionally good. There's a linear network business that we know is heading in the

wrong direction, a skyby mashed free cash flow. It has not been managed that way as of late. That business is not the reason why we're excited about Disney. That's going to be managed. It's a streaming business. We don't think playing abroad gell entertainment streaming strategy the way Netflix doing it. Amazon Prime is doing it is good football Disney company. Right, Walt Disney has these strong brand, strong temples, family based content, they should basically have less subscribers that

pay a higher price. Right. So when I look at the stock, what's embedded in the stock as of yesterday morning or last night was you know, three and a half billion dollars of losses in streaming. Right, it doesn't make any sense when you don't need to spend all that money on extremeous content when you have the temples

they have. So the path they went down about two years ago was to challenge Netflix in terms of the long term potential of the business to be a global, you know, massive player and have subs as high as the sky. They could still have a great business with with not having the same you know focus to just be all things all people. Right, That's the appeal is that this price, what are you paying? Not paying very much at all for streaming if it becomes profitable or

even break even to where it is today. Right, I felt to the previous regime was not going to make that happen because they were weathered to a strategy that was blowed and just folks that that are listening to our thirty three analysts that cover the Walt Distian Company have buys, only five have hold ratings. Michael Nathanson was

one of those hold ratings, So we've got that right. Hey, Michael, I think you know, if I'm the board of directors, one of the things I say is, hey, turn around this company fixed streaming, but also delivered to us, you know, as soon as possible a succession plan, and try to get it right this time. You know, bring back stags, bring back for solo. The street will take either of those. I think, how do you think the succession will work

in two years? Yeah? Good, good question. By the way, we were a hold until this morning when we upgrade this good stuff stuff. Yeah, so we were old. Yeah, it wasn't fun being against what Disney Company. But to your point, I think the mistake was Bob was not a creative person. He worked in the parks his whole career. You could say that I wasn't creative, But you know, Iger was ahead of programing at ABC, worked at ABC Sports. He then became very close to um the content creators

at Disney, and helped help there. So I think you need someone from the other side of the house. You don't need a park exact use someone from the content side. I would spend my time that was Bob identifying two or three people who are the content creators too, to be my successors. You know, it can't be someone from the park side. Alight, all right, Michael Nathans and good stuff. Really appreciated big news, big news also um MOFA Nathans and upgrading the stock here today from a hold to

a bye. So good stuff there. Michael Nathanson, founding Partner and senior Research Channels at MOFAT Nathanson here and the stock is is higher here. I think you know, investors are are looking for Bob By at the bare minimum to just kind of steady the ship. It maybe give some direction and give some U confidence and it's maybe some kind of a little bit of a turnaround. And it's not like we should turn in the entire company,

but there's definitely some big fixes it. Let's get now to my co host on the television show Bloomberg E t f i Q. Katie Greifeld, joins us in the Interactor Broker studio. We broadcast at one pm. So let's make this quick. Uh, what are we talking about? On the show today. On the show today, we're going to talk about e t f s. We're gonna talk a little bit though about the Gray Skille Bitcoin Trust. Is not an e t F. As you know, I'm obsessed with it. This thing. It closed Friday at at discount

to its underlying holdings. This is a ten billion dollar tracks. Why is that by? Why is such a I know I ask people this every couple of days, but why is such a huge discount? Do investors just not believe that Gray Scale has all of the bitcoin it should or let me tell you about it. So it's been treating at a discount for going on a year now. So that's just because of the way this trust is set up so long before f t X, right back when we thought Sam bankman Fried was a super genius

who was going to fix the world. Yes, back when we were young and different people. But it has so this discount it's been around for a while, it's widened dramatically in the past couple of weeks, and I mean I've been asking around why because basically what that means is that people are offloading shares of GPDC quicker than they're selling bitcoin. It was just something that conversation with

James Stayford of Bloomberg Intelligence. His take is that people just want to get away from anything that could have any hint of contagion risk right now, even if it's only a remote possibility. So if you think of it

from that lens, that kind of makes sense. Because you think about gray Skills Parent, that would be buying opportunity right assuming you don't think Bitcoin is going to drop more than no. But what James is saying is that if you think about gray Skills parent Digital Currency Group, they also own Genesis. That's a Barry Silbert company. Yes, that's the Barry Silver Empire. Uh, the Empire is a little bit shaky right now relative to how it appeared to be two weeks ago. So there's just a lot

of fear in this industry right now. There's been cascading blow ups. No one knows where to look next. And even though by you know everything that we know Gray Skill is absolutely fine, there's just a lot of fear in the marketplace generally defined. Do people feel like this is a defining moment for crypto bump in the road part of just the growing process for new classet class Where are we takes, it feels a little panicky. It's

absolutely a life altering event. It's absolutely an existential moment. But if you look past I don't know, the past couple of years, really all of Bitcoin's existence, trawl downs are not unusual. If you think back to pass blow ups Mount Gox, for example, that was the exchange a couple of years ago. That exchange blew up spectacularly. It was hacked. It was a huge scandal. And still and what did Mount Cox stand for? I was hoping you would tell me. So. Mount Cox was the first really

big and popular crypto exchange. It was founded as an exchange for playing cards in the Dungeons and Dragons type of game. It was called Magic the Gathering online exchange Mount I never played Magic the Gathering neither did I really. I have two brothers who Dungeons and Dragons. Guy, I bet I was, you know what. I was mildly into it in like third or fourth grade, before I had any inkling as to how it worked, just because I also loved Deaf Leopard Pyromania at the time. It was

my favorite record. So, you know, people change, I thought you were like a motorcycle guy, which seems unintuitive to also say that you were into I'm telling you this is a long time ago, ka, before I developed, you know, before I turned into a man in any in any case, um you know. So so Mount Cox was the first one to fantastically um implode, and we've since had a number of events a lot this year. It seems like more than ever this year, but maybe that's because of

the size. One of the open questions is what happened to this like half a billion dollars worth of coins on the ft X exchange. I think the debate right now is was there a hack? SPF said in his famous you know, off the record conversation with his friend as a reporter for Vox Beautiful, it was a hack, but maybe it was the Bahamian authorities, um, you know, asking him to get it so that the US authorities couldn't. It's like, I think, one of the most fun and

mysterious issues of the whole Oh. Absolutely, I mean, this is an existential moment, but as a journalist, it's just an embarrassment of riches. There's so many different threads to pull on here, uh, and I mean just the players involved. We talked about Elizabeth Holmes just got eleven years in prison. Yes, right, wasn't that on Friday? I think, and I wonder what kind of prison did she um dupe more people? Was she the source of more financial ruin than Sam Bankman Freed?

I was actually hoping you would speculate on that, and I don't speculate. The question is where do you rank these people in terms of how much damage they've done? F t x more than a million creditors. That's just a staggering number. I mean, I'm sure of them only had a hundred dollars or so on fts. The top fifty had at least twenty one million apiece. The top two had more than two million each. And it's like Bernie made Off, Elizabeth Homes same, Bankman Freed. Are always

people playing in the same league. I don't know under investigation, well, if there is even I don't even know if there's fraud here, right, I mean do we know yet? I don't know. I don't know. I don't know, And I would not make that kind of accusation, no idea. All right, Katie Gray felt, uh, we have some crypto stuff, so that was good. We appreciate that. West Kosova, he is the host of Bloomberg Big Take podcast West, What do

you have for us here? Thanks for having me on again. Yes, this morning, we have a really interesting show that's based on a story that Sheridan Prasso wrote about Shean, which is the world's largest online retailer of clothes as the Chinese company, they sell a ton of fast fashion. These

are clothes that are really cheap. They're kind of on trend, you buying without having to think too much because it costs so little, you wear them for a while, and really they're kind of meant to be disposable, which is why they keep people coming back for more and more. But it then causes all kinds of problems. Yeah, I mean fast fashion. It's a notoriously awful product. I mean

for the environment, it's bad for humanity, it's bad. Movies have been made about the disastrous impact, and consumers continue to go back for more. Yeah, and it's because you know, you can just buy and buy these things, and especially um, you know, younger people who kind of want to be trendy and don't have a lot of money to spend. It becomes kind of like a fun thing to do and don't care apparently about the people who are employed in making this clothing, right, yes, and that of course

is the subject of the story and our podcast. So she In Uh makes uh a lot of his clothes from cotton that comes from the ship Jan region, which is this northwestern region of China that we've heard a lot about in the news because the US and other countries have accused the Chinese government of imposing this campaign of forced labor on the weaker Muslim people there, putting the internment camps and as part of that, forcing them

to work in different industries, including harvesting of cotton. And so what this story is all about is that Sheridan Prasso, the reporter, went to try to find out where does the cotton in clothing from Sheen come from? And she who she went and she actually tested garments that came from there and found out that yes, indeed, it does come from that region. And what are what are some of the western retailers that that that may be involved in the process, what what do they say? What's kind

of the feedback you're getting from the industry. Well, what's interesting about this is sherry reports is that because she In is entirely online, they don't have really any retail operations. You know, you go into h and M, you go into Zara Gap. You know, all these clothing retailers and if you look at the labels on those clothes, allow of them come from Thailand. Now they come from Malaysia,

they come from Vietnam. About their places, uh, in in part because uh, you know, manufacturing is easier, even cheaper than it is in China, but also because they can avoid the problems of sourcing cotton that then becomes problematic because of the Xinjiang region and everything that's involved in the politics of not sourcing materials from there. Isn't it dangerous to even be reporting in that part of the world. Um, well, I don't know that there's a danger. Person in this story.

She had bought garments that came from she and she sent them out to a lab to have them tested. Uh. And then they use this very interesting process which should be listening to the podcast you can here Erry explained she is I wanted the guests on the show today. Um where they tested and they are able to determine not only did this cotton come from Shinjang Um, but exactly where like they know because of the way they tested that it didn't just come from China and didn't

just come from particular region. It came exactly from there. That's how sophisticated the testing is. Now. Well, you know, before this story was I didn't even I wasn't even aware of this company, never heard of it before. But it's a big company. Uh. You got some reporting in their backed by investors including Sequoia Capital and I d G Capital. She And conducted a funding round this year that put its value at one hundred billion dollars. So this is a big company. Do we have any response

from the company. Uh, yeah, you're right, it is huge. And it's funny because I hadn't really heard about it either. But you know I talked to my daughters, they sure heard about it. And you talked to you know, young people, they know all about this company. And so just go to show you like you go on TikTok, and there are people who who like put out on TikTok all their she in halls where they show all the clothes that they got um, and so this has become kind

of like a thing. Um. The company says that they may have agreements with supply suppliers and the suppliers tell them that the clothing is all uh, you know, made humanly, and that's the sourcing of the material is smiling, that is, share your rights. There's an interesting sort of buying that

she and finds itself in because they're Chinese company. If they deny that the clothing came or the cotton came from Shenjang, then they could get themselves in trouble with China because China claims that there's absolutely nothing wrong with sourcing it and they say that there is no forced labor UH. And then of course if they say that it does come from there, then they get in trouble with Western government. So they're kind of in between. But

they're responses. There is no forced labor used in Jinjang, that is the Chinese government's UH position, and their suppliers certified that the clothing is made UH correctly. So But I mean um Chinjang is Chinese. She and his Chinese TikTok is Chinese. I'm guessing your kids aren't. But are the customers for She and mostly Chinese UM consumers Uh.

She sells close all over the world, in Europe, in the United States, everywhere, UH, And so they are truly a global retailer, so many many of the customers, I mean, Ali Baba is a global retailer too, but most of their pyres are in Asia. Right, It's not like you and I are gonna say, hey, I need a vacuum cleaner and go online and get it at Ali Baba. It's just not as likely as someone in Asia buying it.

That's right. Although, um, for this clothing, because it's cheap and it's easy to ship, you know, it just comes in a little envelope like anything else. Uh, then it shipped all over the world. And because the uh, these things don't meet the threshold for value that the U S Customs Enforcement Agency would like take a look at these things. They just come to the mail and you know,

we're talking millions and millions of packages. So there's no way that the US can track every envelope that comes in. All right, was great stuff as always, West Coast of a host of Bloomberg's Big Take podcast. You can listen to The Big Take podcast on I Heart Radio, app, Apple and anywhere else you get your podcast and listen to The Big Take every night out of eleven pm Wall Street Time on Bloomberg Radio. Thanks for listening to

the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Pet On false Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio