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Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller.
Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market Moven News.
I'm the Bloomberg Markets podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com Slash podcast. All right, Herman chans in here and he covers the regional banks from Bloomberg Intelligence. I don't know why he's in here. I don't know why we got to talk to this guy, but Hermann what's happening with the regional banks, because I feel like a huge shoe is about to drop in terms of I know, commercial real estate loans,
just higher rates, credit cards, stuff. Give us a sense of what's happening with the regional banks and is the FDIC concerned?
Right, So the sentiment for regional banks has been poor since March and April after the failures of SVB and Signature First Republic, and shares haven't really rebounded since that time. There's been concerns on.
What you told us was probably gonna happen. Then we're not going to rebound because this is a long term earning.
We're facing a longer term earning issue from margins because of higher funding costs and higher interest rates. Banks aren't lending that much because they're focused on building capital because of tougher capital rules. And then you mentioned of commercial real estate and office cre a potential shooter drop there potentially next year with higher loan losses. So the sentiment has been poor. But also you've seen a bid recently over the past couple of weeks as inflation pressures seem
to be easing. So the thought of interest rate cuts are positive for banks. And actually the regionals have rebound about fifteen percent since their lows earlier.
And I look at M and T Bank is my proxy. I know there's an ETF out there that is probably much better, but I just like looking at MT. It's a baldy regional bank of fourteen percent off of that low back in late October. That's right.
So there there is a bit of an inverse relationship with longer term treasury yields and regional bank stock. So that's something to look out for. In terms of the fdi C, the organization is expected to vote on a special assessment to replenish their depositive Insurance Fund, which was hit from the bank failures than the year. So the largest banks in the United States are set to have a hit in the fourth quarter, and so.
The large like JP Morgan has got to pay for the regional banks. Yeah.
And by the way, was it a was it an industry wide problem or were the manager's SVB group just to sleep at the wheel.
SVB was a bit asleep at the wheel. I would concede that.
Were passed out cold right blood alcohol content like four.
Not really focused on interest rate risk at that Well.
Why would you focus on interest rate risk as the head of a bank, right, who cares about that? And now Jamie Diamond has to pay the tab he must be very unhappy about it.
Yeah, the bank, the surviving banks are paying for the sins of the guys that had the failed institution. So it is how the industry works, for better for worse.
No, really, you think SVB group would bail out JP Morgan.
Well, M and T like, like Paul said, is bailing out SVB as well. So everybody has to pay their fair share.
Full disclosure. Hermann chand loves M and T. We used to work there, yes, yes, in investor relations.
That's right. Yeah, and you are you're a proud mid market kind of regional bank.
I mean I bank at the Huntington in Columbus, Ohio.
A huge fan.
Look because as a local I've grown up there. Generations of my family have banked there, so you know.
Fuller name carry some weight there well.
Or the benefit is when times are tough, they work with us, you know, whereas a bigger bank would say we'll see you later, Cinara, right, Huntington will will stick with us and work with us, because that's just how more localized banks work.
So, but there are four thousand of these regional community banks out there. If I put my M and A hat on there, I feel like that's an industry ripe for consolidation. That is that fact the case? And if so, what would be the catalyst?
Yeah, the regionals have talked about M and A being a factor later on, but not quite over the next one year time horizon. You have to remember that higher interest rates are are a factor and when banks do M A they have to mark to market the target's balance sheets. So and marking to market means that they have to set the current value on both the loans and assets and de posites, and that can create a
hole in the acquires balance sheets. So they're waiting for maybe rates to come down a bit so they don't have this tangible value hits. The second factor is that regulation is still up in the air. The bidenmin administration has been a bit reticent for bank m and A despite some of the pressures earlier in the year. That seems to be easy, but there's still a lot of questions on that front.
All right, So the commercial real estate, how big of an issue is that for the banks? And when will we see it.
I guess by the way, you know where the phrase waiting for the other shoot a drop comes from. No, but you told me it's because back in the days when New York City was filled with these tenements, the walls and the ceilings and floors were so thin that you could hear when somebody would come home from work and take off his shoes. So you knew when one dropped, you were about to hear the next shoe drop.
Okay, very good.
Oh, you learn something new every day.
I think it's great that it's tied to real estate, right because the next shoe to drop is also tied to real estate.
Yeah, that's true. So in terms of commercial real estate, it creates more headline risk in my view than actual potential losses. For at least the regail banks that I cover, we're talking about two to four or five percent of their total long portfolio is tied the office commercial real estates.
Who owns that stuff.
Then it's it could be smaller regionals, it could be you know, securitized at CNBS.
I'm thinking about I'm gonna go back to my Lipstick building on Third Avenue and fifty fourth Street here in Manhattan, right at some point that thing's going to reprice, and it's going to reprice it up big discount, and the equity is going to come out of that thing, and whoever's got the mortgage against that's gonna have to do something. Yeah, you're gonna have to just wonder who owns like those kinds of commercial real estate mortgage.
My brother, by the way, it works in the Lipstick building.
Such a cool building. Yeah, I think it's awesome.
Yeah, so hopefully they do there. Oh yeah, but there.
Yeah.
So it is a headline issue, but I do think it's going to be manageable. But you will INVIBC losses for the regil banks, and they are already booking reserves against potential losses expected over the next few years.
All right, So but if I'm looking at M and T bank, I mean, so, when do I say the earnings risk is behind this industry. I'm looking at the next year's numbers and it's not. Then, I mean, they're still going down. I guess in twenty twenty five is when you expect earnings to rebound for this sector.
Yeah, I think at We've written that a note actually today on net margins potentially stabilizing and for most of the banks that I covered, that will happen by the first quarter of next year. If it's it's even stay where they are today, so that's positive. You're not getting any benefit from loan growth, so that's an issue. There's sticker shock in terms of how interest rates are for both commercial borrowers and retail customers as well, So that's
going to be a factor for the foreso future. But in terms of net interest margins, that stabilization will help, you know, reduce some of the pressures on ANII net interest income for the regionals.
All right, Man, Herman Chan, you're the man. You cover all the regional banks for Bloomberg Intelligence. We appreciate getting a few minutes of your time coming here in our Bloomberg Interactive Brokers studio here. Still a little bit of headwinds there for the regional banks, but I'm looking at some of these earnings astems out there. They start turning really noticeably positive in terms of growth rates in twenty
twenty five for some of the regional banks. Who knows, that could be an interesting area.
You're listening to the Team Cancer Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.
All, let's do a little C suite conversation here. Let's talk healthcare, biotech, cancer. Helen Sabzavari Joints So she is a CEO of Presgen. Presogen is a publicly traded company lists on nasak pg e N is the symbol for to type into your Bloomberg terminal. Helen, thanks so much for joining us here. Talk to us about Presagen. What do you guys do? Where is your focus right now?
So we have been focusing on a sell and gen therapy and really bringing it to the next level. I think what we know that this is going to be the cutting edge for the next decades, and it is working for treatment. It's limited in a hemetological oncology setting.
Okay, so we're talking cancer here.
Yes, cancer setting. And however, the problems are basically the access to the patient, the cost that it's relevant half a million dollar tag prices for the treatments and you can only get advce precedent is bringing it to the next level. What we are doing is manufacturing overnight at the fraction of the cost done at the hospital, so you don't need centralized manufacturing.
You make it at the hospital, at.
The hospital and accessible to the patient and they can receive repeated doses because the cost is so much lower, and it can be produced overnight, and it's precise to the patient because thev use their own cells to modify them overnight and infuse them back to the patient. So this is why we say we are bringing the therapy to the next level.
Better are my chance is now of surviving if I get cancer today, say versus ten or twenty years ago.
Definitely, the field has been coming along in various immunological therapies and now with the cell engene therapy, so the chances of survival is much higher. The percentages still is not up where we need to be. When we look at our therapies with the VR in twenty thirty percent response rates, we need to do much better than that.
And this is one of the aspects that for instance, even the cell engene therapy right now in the field of cancer for the liquid cancers, they do well in some of them, but they have not had any effects on solid tumors. And this is where we come in as well, because now our technology can address both sides overnight with the much lower price tag for the patient and specific to the patient cancer. And I think that's very important because then you avoid treatments that you know it will not work.
I'm going to ask an ignorant question, so pretend I'm a complete moron. Are you there? Why haven't we cured this disease yet? I mean we've been throwing hundreds of millions. I mean, our boss throws billions of dollars at this disease for decades, and there are a lot of people out there, probably not medical professionals, but people who think, you know what, this disease is simply too profitable to the healthcare industry to actually cure.
I think the issues with the cancer is multifaceted, and the mechanism of an escape of your own cells from your own army, which is your immune cells, is very complex. And the reason that over the years, you see, we have moved the bar from chemo to now immunological immunotherapies and now to your own cells recognizing it. And this is exactly what we do. We are bringing out your own cells there and train your army back and we reinfuse it back to you, so now they can recognize
the enemy from within, which is your tumor self. And I think that's where the difference is. And what we have to do is obviously make this much more accessible to the patient very rapidly, because the patients don't have enough time and the current cell engine therapies will not address that, and also treat a much larger patient population, which is the presage and platform with the ultra cortee does that overnight at the hospital.
So where are you in the development of your company, presaging, I mean, are you guys? Do you have your product? Are your or your pharmacistical in the marketplace yet?
So what we have is our ultra car is already in the clinical trials across the United States and we have been reporting not only the safety but efficacy. For instance in AML patients that they don't have more than a few months to leave and we have shown complete and partial responses in these patients in ovarian cancer as well as triple negative breast cancers that we are moving, but also presgen is not just the ultra Car company.
We have other gene therapies modalities that addresses the HPV cancers, and actually we are really excited because the twenty twenty four is going to be a breakout for a precegen as we are bringing the first drug for a recurrent respiratory papillomatosis, which are the benign tumors in the trachea and throat of the patients, and the FDA has given us the accelerated approval and we are moving toward the commercialization by twenty twenty four, which now changes the paradigm for our patients and.
For our investors.
I mean, are you I'm just going at EAR stock. It's down thirty three percent this year. I have no idea why it's got a market cap at two hundred fifty million.
Trained at sixty five dollars a share in twenty fifteen, which was admittedly years before you came into the company, but it's trading for a dollar now.
It was a different company. And I think what we have done is since twenty twenty that I have become the CEO, we have changed the company and focused mainly on health and in three years we have moved the platform from a discovery to the scaling up and to the commercial and we just received not only the prayer true designations from FDA, but accelerated approval, and the company by next year is moving toward the first commercialization of the drug in the HPV field, which, as you can imagine,
it's a huge field in cancer as well as in infectious diseases.
So we are going to get to a point where there will be treatments that will be better than chemo.
Oh, absolutely, we are moving in that direction. And the cell engine therapy is exactly that. What we are doing currently at Precegen is really taking your own cells, immune cells and modifying them and returning them back to you. So the safety is much more favorable, the toxicity is much less because it's not chemo that kills across. This is designed to only kill the tumor cells and nothing else. And I think this is why Presogen is bringing the field of cell engine therapy to the next level.
Who else is doing this?
Like?
Who else is doing kind of.
There are a number of companies that they are doing the classical cartis, but this is.
Exactly cart yeah, CARTI And.
Whether the timeric antigen receptor T cells, these are modified tea cells. However, the way it's done, it's done in a classical fashion with the centralized manufacturing which takes almost between an on to two months. The cost of these parties are close to four hundred and fifty to half
a million dollars. What we have done is do that in the completely differentiated way than everyone else, and the precedent is the only company that has this technology currently and we do that at the clean room of a hospital without.
Expert all right, So all I know about biotext is it's a biner. It either works and a stock goes up through the roof, or it doesn't and it goes to zero. What's the what's the mile post for your company for that?
So in the very near future, in twenty twenty four, we are moving our first adenoverse Gorilla, a dinniverse platform in an rr P patient rare disease patient, which FDA has given us the BLA, and we will be commercializing this. So that would be the first and that's why I think we have a great opportunity and very exciting year in twenty twenty four. And to your point, the stocks definitely has been under pressure. All the stocks have been
including Presigen. However, we are confident at twenty twenty four with the new drug that we are bringing forward and already with accelerated approval from FDA, we are going to bring value to our patients as well as.
To our fascinating story. As always, I mean, you know so many fronts on this fight against cancer. Helen Sabs the very CEO. Presigen is the company. It is. Pg e N is the ticker. With some new techniques and new therapy party car.
We're learning something.
We're learning something the Noverse platform, which addresses both oncology in HPV cancers and infectious.
You're listening to the tape Cancer Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven.
Let's bring on our next guest. Brian Stelter, a special correspondent for Vanity Fair. You know him from CNN. He was a longtime correspondent there at CNN. Producer of one of my favorite TV shows which I just finished, The Morning Show that's based upon his book. He's got a Top of the Morning, Top of the Morning. Right, he's got a new book at this Boys, Guy's Prolific Network of Lies, The epic saga Fox News, Donald Trump, and
the Battle for American Democracy. Brian Stelter Joints says, Hey, Brian, thanks so much for taking the time to join us here kind of what did you learn in your reporting for your new book?
Here?
This is territory that you're familiar with.
I had to write it because the last time I wrote a book about Fox, it was mostly anonymously sourced, and you all know that's how it has to be. Sometimes some sources insist on confidentiality, they won't go on the record. But then three years later, when Dominion was suing Fox News and Dominion was able to obtain all of those emails and text messages side Fox, I felt like all of my anonymous sources were now speaking on
the record. Of course, it wasn't their choice, you know, they were forced onto the record through the legal process, through the document discovery process. But there were so many revealing messages, including emails with Ruper Murdoch, that I thought, hey, someone's got to turn this into a book.
So what's your take on where Fox News goes now I mean post Tucker Carlson, you know, ahead of a new election season. They've got a new CEO. There's so many changes that have happened in the last I don't know year, six months to a year. What happens to Fox?
That's right, we talked after Tucker Carlson was ousted on the air. Then Ruper Murdoch decided to step aside. Its actually takes effect this week yesterday at News Corp, Tomorrow Fox Corps. He becomes chairman emeritus, and he's really elevating his son, Lachlan, making it even more clear that Lachlan is the future of these companies.
What's the future of Fox?
Well, in the book, I quote an insider saying Lachlan just wants to minimize headaches and maximize profits. I think that's why we see in Attucker Carlson fire, and he wants to.
Minimize those headaches, and then he wants.
To try to figure out how to make as much as he can out of these declining cable businesses while also investing in two being in Fox Nation and other streaming ventures. Of course, Fox is one of these subscale media players. It's not nothing like Netflix or Disney. So I think, you know, in the future, anything could happen. I think the most likely scenario is we're going to see another attempt to recombine News Corp. And Fox Corps, but maybe not for another year or so.
So, Brian, what's in some of this What are some of the new issues that you kind of unfounded or are founded here in this new book.
Yeah, you know, what I get at is Rupert and Lachlin Murdoch's role within this company and this network, Fox News, that is the dominant player within the Republican Party. And what I found is that the times when Rupert and Lachlan should have stepped in and been more involved, they weren't. They were laid back. They were kind of letting others do the dirty work. Remember in Succession when Lucas Mattson says he's.
Hiring a sponge.
Well, I came to realize that's what the Murdocks really do in real life. You know, No wonder this show was so heavily reliant on the Murdoch story. They have their own pain sponges, you know, to clean up the messes. And so that that I found was interesting when reading these emails, and text messages that they keep there. You know, they have they have passible deniability sometimes with some of these scandals and lawsuits.
And of course these lawsuits are ongoing.
We know Dominion settled, but Smarmatic another voting company is suing Fox. There are a lot of shareholder lawsuits and other defamation lawsuits. It is really it's really remarkable that here we are talking to the end of twenty twenty three and there's still so much litigation about the last presidential election.
What do you think about I mean, we've recently heard that Donald Trump was dead set against leaving the White House, and you know, more and more is coming to light. But it continues to shock me that he has such a stronghold on you know, place like Fox or the US Congress. How how does that How does he continue to have that kind of strength.
I think it has a lot to do with the rewriting of January sixth, And I discovered this as I read through all these emails and texts that after January six Ruper Murdoch said very clearly, We're going to make Trump a non person. We are pivoting away from Trump. He was told by his number two that Sean Hannity is ready to lead the seventy five million Trump voters away from Trump. So clearly there was an attempt to make Trump a non person, but it didn't last. It
didn't last. So why didn't it last? Why was Trump able to get back to center stage? Why was he replatformed? Well, I argue it's because Peter Really Tyler Carlson rewrote the story of January sixth to say it wasn't an insurrection, it wasn't a riot, it was just a tourist visit gone bad, that it actually wasn't that big a deal. That hey, maybe the FEDS were involved, Maybe the government
plants were in the crowd ginging up the protesters. Basically, by presenting a conspiracy theory version of January six I think it helped to absolve Trump in the minds of his fans, to absolve Trump in the minds of Fox's viewers, and thus now here we are, Trump's still the dominant figure in the primary.
Brian, what role do you expect Fox News to play in this upcoming presidential elections visa VI the former President Trump, who presumably is the publican nominee.
Well, look, the first two GOP debates of the season both went to Fox. Now there's going to be a few more debates, but without Trump, they're becoming less and less important. Trump is in a little bit of a standoff with Fox. He thinks he's more powerful than Fox. You know, they go back and forth because you know, they're like, you know, it's like, I don't know if it's a buddy comedy or it's a horror movie, but it's a situation where they're they're kind of both battling
each other at all times. But at the end of the day, what matters most is that the audience comes home and Trump comes home.
He will come home.
To Fox because they have the same interest. They want to see Democrats defeated. So even though there's lots to talk about Trump trashing Rupert Murdach complaining about Fox, I don't think that'll matter in a general election. I think what will matter is that Fox still has a stranglehold on a giant of the right in the United States.
Does CNN want a piece of that? I mean, they did a town hall with Donald Trump. They've made some moves that media critics have questioned, as you know, what's CNN doing well?
I think right now CENN is trying to report the truth as loudly and clearly as possible, and I think they've been excelling with coverage of the war between Israel and Hamas. I think there was an effort last year, and I think an understandable effort by David Zaslov and others to try to figure out how to appeal to everybody, appeal to.
Conservatives as well as liberals and moderates.
But I think we have to make a distinction between conservatives and MAGA loyalists. Okay, it's the same distinction Biden makes in his speeches between Republicans who he's known for decades versus MAGA Republicans who seem to want to burn it all down. You're not going to be able, in my view, to get through to Trump loyalists who have been told for almost a decade now that the real news is fake. So if that's the strategy of CNN, that wasn't going to work. But I don't think that
was the strategy. I think the strategy was, and maybe to some of sense, is to try to show that it's real news coverage.
Not the fake news that Trump lied about.
And you know that's the problem for a lot of these brands, a lot of these media brands they have they're up against the disinformation campaign.
So I have a lot of sympathy for the CNNs and the NBCs.
Of the world that are trying to get the word out that they are actually just doing the doing their jobs reporting what's in the world, but they're up against this kind of this hurricane of noise and lies from Donald Trump.
Brian What What? What's happened to Tucker Carlson? Do we know kind of how that has turned out yet, because for a while it seemed like there were a lot of maga Republicans that were going to switch away from Fox and go to I don't know what he's doing, but has he still got a big following.
He doesn't quite know what he's doing yet either, but he's making a lot of videos on the site formerly known as Twitter, and he's reportedly raising money and making ad deals so he can grow that into a real media company. I think he has big ambitions because he wants revenge against Fox. He wants to show Fox who's boss. But right now his platform has diminished, He's not making
as much of an impact he's not as influential. Yes, he still has a fan base, but it goes to show once again that the machine is bigger than the parts.
The parts are replaceable.
Fox News is the platform that matters, not the individual hosts and.
Gosh for whether you love it or hate it.
That's a credit to Rupert Murdoch for making that investment almost thirty years ago.
Yep.
And I always say what made the Fox Network was Bart Homer Simpson. So that's kind of when they find to turn the corner. Brian Stelter, thank you so much for joining us. Appreciate getting a few minutes of your time. Brian Stelter. He's a special correspondent for Vanity Fair, formerly a correspondent for CNN, and producer of Apple TV's The Morning Show.
You're listening to the tape Cansur live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
All right, let's switch gear. Let's get to our next guest Laura Martin. She's a managing director of senior Media and Internet analyst at need Him. She's based out in Los Angeles, right in the heart of Hollywood. Does all that stuff out there? She joins U via zoom. Hey, Laura, I want to start with Disney here. You know, Bob Iiger has been back now, I don't know, a couple of years, a year and a half something like that. What do we know about where he wants to take this company?
You know?
I think on the part we have two companies here now.
One is Parks and it's on a tear at record high margins, really a big cash flow generator, and he's going to invest sixty billion dollars in that business so that that business has proven its growth you know, trajectory, and he's going to invest in driving that growth longer.
Fine.
I think what Nelson Peltz is arguing about, and I think where I think the long term media analysts are on this is I don't think he's actually shown us that he can grow the now that's streaming sort of hit mature and it's still never made money.
Can the content business grow, Paul?
And if not, why is he keeping all these people like, it's okay of a business. He doesn't have a dividend, so it's okay if business doesn't grow, if you cut your people and you raise your dividend, that's.
Called a garb stock, that's called a value stock. Okay.
But right now he's investing like the content business's growth and I think Wall Street is unclear that the content business is still a growth business.
All right, So I mean it's still mist sacrilege to ask this question, but you could make the call here, like if I'm an investment banker, I'm a media m and a banker. Boy, there's a lot of pieces here. Do I try to break this company up and see if I can get better value in the marketplace for the pieces?
You know, a lot of.
These CEOs don't want to relinquish actual control of an asset because that's how they judge their powers. How many employees have reporting to them. I do like the idea Paul of spinning off ten percent of Parks, because I
think Parks really is a growth engine. I think you would get a much higher valuation for Parks if somebody could buy it alone away from the content assets, where there are a lot more questions, and in creating that security but still keeping it for tax consolidation and teach, you know, keeping control over it, you would get a higher value for the aggregate Disney shareholder.
What's going to happen to ESPN?
Good quod Well, lots of speculation here, I do you know Bob Iger on the call did say he's looking for people or companies that can enhance his distribution, give him more content rights and or give the more marketing like Gravitas, so.
He doesn't need need money.
Yeah, Well, I like the NFL has an idea a lot or the MBA because like the NBA rights, NFL has got locked up for a decade, so he doesn't really need the NFL right now. But I do like the MBA, which is coming up, and they're saying that the that the cost of the MBA might go up by four billion dollars, and Bob Iger has promised us
an extra two billion dollars of cash next year. Well, if the NBA writes BUTOK, by four billion and he pays that, he's going to wipe out that promise and make his free cash full even worse.
So I like that idea as a strategy.
Look NBA will give you a little less cash than you want, but we'll give you ten percent of ESPN and we'll sign a ten year deal.
That's actually a better deal for the NBA, if you ask me.
Interesting. Hey, So, Laura, I went to get your opinion on somebody. I mean, you're right, we're coming up in a business. The media moguls were Ted Turner, you know, Sumner Redstone, Ripper Murdoch. Is David Zaslov the new media mogul for the kids out there today coming up in the business? Is he it? Dude?
Did you read the New York Times this morning? I did ripping on Jeff Zucker for having tears in his eyes. Yes, after Zucker was like I needed you as a friend.
Yep.
I mean that guy sounds pretty harsh. Do you want a friend like that?
I don't know. I don't know.
Do you want a boss like that? Do you want an employee like that? Would you want to be in the same room as a person like that? I mean, I don't know if it's true. I'm just reading the Time story, but you know it's rough.
So Lauren, tell us about Zaslov.
So I will I'm going to answer your question though, I think the new media mogul is Jeff Bezos, who now no longer runs Amazon, the guy who started Amazon Prime is a media mogul. I think it is possible. It is one of the few streaming services that survives because it's got Amazon e Commerce, right, and Amazon Music and Amazon and MGM's library. You know, I think the new definition of media mogul. It's too small. David Seslov is too small. The company runs is too small.
But is Amazon kind of an also ran to Apple because Amazon Music? What I use Apple Music?
You know?
Amazon Prime, Yes, I have it, but Apple TV is much sexier.
Right.
Why Why isn't Apple the big media mogul.
Well, I guess from a media mogul point of view, I mean somebody who runs around Hollywood, Okay, doesn't just mean you run a business like there's like literally, when I think of I do cover Apple. When I think of them, I think of these, you know, brainiac guys designing beautiful pieces of hardware, where services is sort of the add on to keep their hardware selling.
None of them feel like moguls to me. Literally, the opposite of.
Moguls, like down to earth engineers with beautiful design characteristics.
None of that is about having lunch at Spagos.
Meanwhile, Jeff Bezos is ripped. Yeah, he's got a trainer coming every day. I mean, I don't know, he looks like he does.
So Laura talk to us about Meta. You got you have been kind of underperformed on the stock. It's just been ripping. What do you think is going on there with the stocks?
What?
He works in good shape too, Yeah, he is.
So what do you think is happening over at Meta? And maybe what the street might be missing or maybe you know what you're seeing.
Yeah, so I think I think near term, he cut a lot of people. Last year.
He cut twenty five percent of his labor force, which, as you know, Paul destroys morale for an enterprise. So he cut twenty five percent of his people, and he had anniversaried the negative comps member. He said when iOS changed its privacy policy, when Apple changes privacy policy, he was going to lose ten billion dollars in revenue.
He did that for a year, So his revenue went negative for a year.
So he's back to positive revenue growth and acceleratingly positive revenue growth, and he has twenty five percent fewer employees, so right now that stocks on a tear this year because of those fundamentals. In the near term, our cell is predecorated on three things. One, he doesn't control his content or his distribution. His content is us as user generated content, and they're moving to TikTok, and they're taking their clients to TikTok, and they add revenues following them to TikTok.
So the competitive situation in his.
Core business is really bad, and the regulators are late, so they think he's a monopolist, so they're going after him for his market position three years ago. So he has regulatory headaches that cost a fortune and distract the whole enterprise. So he's got regulatory hassles of being a monopolist when early TikTok is shipping away at his base, and then the metaverse spending is coming back next year.
And now he has a whole new spending category which is called jenerative AI, which should be a huge revenue generator, except he's giving away.
His large language model. He's not charging for it.
So here's another big cost like center called jenerative AI, and he's making his everything he does there. He's giving away in an open in an open large language model. So you know, none of this is good fundamental outlook, even though this year I'm getting really killed. My rating is wrong this.
Year, all right, So what what are you? What are you really spending your time on these days? Is it? Is it? Apple? Where do you think your client should be thinking about it for the next one to two years, because, boy, you take a look at some of the traditional media companies that you and I grew up with, that's a tough call right now.
Yeah, Unfortunately, I think I think all these media companies have become too small. I mean, when you have somebody like Apple generating ninety billion a year and Google meaning Alphabet generating sixty billion dollars a year of free cash flow, that's like bigger than the market cap of like a bunch of these companies combined. So I think the answer is the old media companies need to merge into these global distribution juggernauts.
They need to get bought by them. The problem is, you know, Washington, d C.
With Democrats at the head of every agency, it's very tough to get acquisitions done. So what these media companies need to be doing is shrinking meaning laying off people, increasing their dividend, and they've become value plays.
They are no longer growth businesses.
Is there a shakeout here? Is there still maybe consolidation of media company A media company b getting together last gasp?
Yeah, I mean I think I.
Think it's I think there's a widely almost a consensus rumor in a sense that Paramount's too small needs to get bought. It owns CBS, so it cannot be bought by NBC, which is Comcast. It cannot be bought by ABC, which is the Walt Disney Company, so it can't be bought by Fox, which it was Fox. So really, David zaslom Or, you know, I guess like Amazon could buy
it or something. But I think there's sort of a consensus that probably Warner Brothers Discovery buys Paramount because it can own it doesn't donate in broadcaster already.
Right, all right, Lauren, thanks so much for taking the time. I always appreciate getting some of your Timelare Martin. She's a managing director, Senior Media and Internet Analyst at Needham and Company. She's been based out on the West Coast her entire career, so she's kind of right in the backyard of kind of what's happening out there in the world of.
Thanks for listening to the Bloomberg Markets podcasts. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three and not fall Sweeney.
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