How Sinclair Broadcasting Is Delivering Trump's Message

L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well, the Sinclair Broadcast Group is not very well known, but it has one hundreds and seventy three broadcast TV stations, mostly in small markets like Sioux City, uh fres No, Little Rock, some bigger ones Pittsburgh, Salt Lake City in Washington, but they have increasingly taken a rather conservative band, Felix to let Bloomberg Business Week Reporter wrote a story about this that was truly fastening and Felix, first, can you

just start with how you came to even write about this? Yeah, Well, it's one of those fascinating companies that kind of flies under the radar. Um. The way I got interested is when they announced their four billion dollar acquisition of Tribune Media in May, and I was sitting around with a couple of my colleagues and we're like, how come we don't know much about Sinclair or who runs that are

what the culture of the company is like. And for a very important and influential media company, UM, they managed to really keep their name out of the news as much as possible. Tell us about David Smith. He's the chairman of the company. Him and his three brothers inherited the company from their father, Julian back in the who started the company originally in nineteen seventies. And for the first you know, a couple of decades of the company,

it was a really small regional business. And then the nineties David Smith really started going out and acquiring other stations, and they've been the most aggressive acquirer of broadcast TV stations to the point where now they're not only the largest station already station group already, but now, uh, you know, with the acquisition of a media they're going to be by far in a way, the largest broadcaster in the country.

How did they get around anti trust rules in SEC regulations. Well, it's amazing because you know, David Smith uh and his brothers are all big supporters of Republican politicians and conservative causes. Uh. If Hillary Clinton had won the election, there's no way this Tribune Media deal would have gone through the FCC, H would not have allowed it. And basically what happened is when Trump won his nomination to run the FCC, pretty soon after taking over, changed a rule that limited

ownership of local media companies. And as soon as that rule was changed and this arcane rule was re emplaced, UM, then that allowed UH Sinclair to buy Tribune Media and it's the biggest acquisition the company's history. Felix described for people how the television business works when you own a station and are an affiliate of a network, and then

your ability to insert local programming. Yeah, well, you know, basically, the station owner UM, even though the branding is from the network like ABC, NBC, Fox, CW, the station group that owns the station, like Sinclair, has a lot of influence and sway over the newsroom, which is really what creates the programming. So the local you know, your morning news, your evening news, your local nightly news, all of that is controlled by a station group that you know, the

reports of the station group. And so what's amazing about Sinclair's They've really pioneered this method of injecting essentially centralized conservative political punditry into all of these small stations around the country. So does Sinclair have any direct relationship with President Trump and some of his cohorts like uh Steve Bannon and others. Or is it just sort of a

tangential relationship based on the ties of the founders of Sinclair. Uh. You know, Initially during the start of the two thousand and sixteen presidential campaign, they threw their support behind UM Ben Carson, who, like David Smith and his brothers UH, is from the Baltimore area. UM. But once Ben Carson dropped out, they really threw their support behind Trump. They did a lot of you know, these centralized news stories

that's were sent out to the station's criticizing Hillary Clinton. Uh. They've broke her to deal with Trump and his campaign to get more access for the reporters in exchange for not really criticizing uh those interviews at all and running them in full. And yeah, they've basically worked pretty hard to UM to align themselves with Trump. UM. Most recently and probably most importantly, they hired Boris Epstein, who was a uh, you know, an aid to the president, one

of his real surrogates on TV. Throughout the campaign, they hired Boers After a brief stint in the White House, they hired him to be their chief political analyst and he now does you know, three uh segments a week, many of which is echo White hot House talking points, and each of those segments is then sent out to every single newsroom around the country that they're called what in the in the terms, they're called must runs and even the year. And this creates a lot of tension

at the stations, particularly in big areas. Um, you know, they've had a lot of friction with for instance, Como TV, which is the station that they bought in Seattle area. It's a very progressive city. It's a liberal viewership. And when you talk to the people at these stations, they think this is crazy. We're doing our local newscast and all of a sudden we have to cut, you know, two minutes out of the evening news to go to this you know, former Trump spokesperson to do a segment

about how great Trump is. Of course, it only matters if people watch, and real quick are people watch ching is listener? Is viewership going up? They have a big aggregate audience. I don't think the audiences are going up. And typically they don't even really with their stations in these markets. They don't really try and have the top station ratings wise. Uh, they usually just um, you know,

buy more stations in the market. Well, it hasn't helped the stock stocks up four percent so far this year. Thanks very much, Felix Gillette. Great story. I encourage everyone to read about the Sinclair Bard Broadcasting Well. I am very pleased to welcome Cord Christensen. He is co founder, chief executive officer, and chairman of pet i q, the Boise, Idaho based company that just distributes pet supplies and adjusted it's I p O. It shares her up more than

four sent on its first day of trading. Cord, congratulations on the successful I p O. I wanted just to get a sense of from you, first of all, before we get into the actual financing, about pet i Q and what the business model is and what the growth potential is at this point that you see, yes, thank you, we uh care a. Pet i Q are very focused on one thing, and that is providing better availability of the best pet healthcare items and by making those available

through major retailers across the United States, and the company founded day one with that focus. We've never changed that focus and ultimately it's a very large market that's growing

extremely well already. But there's a significant number of pets out there in the country that do not get great healthcare, and we think because all pets end up buying their products through our customers, we have the best opportunity to help educate consumers, bring in those those consumers that are not providing that, and ultimately grow the market significantly for all people that participate in it. We think it's great for our supplier partners, for the company as shareholders, unnultimately

for consumers and their pet owners. Is is this gonna be a shot at veterinary offices, because isn't that where most people are most medication for pets is currently purchased. Yeah, we sure hope not. We built the company hoping that we would grow the total market and help everybody be successful in it, and we've seen we've been in business now since two thousand and nine, and as a company as we've grown there definitely was early days. I think some people that had the fear of the unknown and

definitely thought that could be the case. But what we've seen is the market's growing and we're definitely seeing those new pets coming into it, and the veterinarians have grown both the visits and the product business that they have in their clinics every single year we've been in business, and we hope to continue to drive this success in the veterinarian's office. We view them absolutely the critical part of the partnership here at pet i Q and want

to support at them enory and every way we can. Okay, I got that. But you know you've got three main categories of business, right, I mean you've got the prescription medication, You've got the over counter medication, and then the health and wellness products. Correct, That is correct? Okay, So I'm

looking at, let's say, the prescription medication. I mean, I got to think that if it's less expensive at you know, Walmart or pet Smarter or Kroger or whatever, that that's where people are going to go, as opposed to just saying, okay, give me whatever you prescribed and I'll pay for it. Yeah. I think that definitely could be the first perception. There's definitely going to be some people that say they're going to go there and buy their pet prescriptions where they

buy their human prescriptions. But there's been access to pet prescriptions outside of the veterinarian market for a very long time. You have great companies like One Pet Meds that have been selling in that manner for a very long time with with pricing that's been very very established to be

a saving So we think we can peacefully coexist. We think we can drive a lot more people into the space and and ultimately the veterinarians will gets the first meeting, they get the opportunity to be with the patient first, and that patient has the opportunity to buy their products there.

So more times than not they'll choose to buy at the veterinarian But there will be those that want to come and get their pet prescriptions and they're over the counter medications to our customers, and we view it as a very creative opportunity for everybody that's in the industry. Court. You know, we had a guest on a couple of weeks ago who is saying that there have been studies done that show that people love their pets more than

their children. Uh. You know, I have to wonder, just in light of the increasing love and emphasis on pets, whether the entire amount of spending that people uh have every year on their pet healthcare, whether that's rising at an exponential price. Can you can you give us a sense of that? Yeah? I think um I mentioned it a number of times throughout my career, but it's been really interesting. For two years on a row now there's been more pets brought home to US households than actually babies.

And so if you just think of the trend as that continues to compound, as those pets year over year do that we're going to see. Well, I'm just like trying to comprehend that the past two years there have been more pets brought home than babies in the US for the first time in our history of our country. Two years in a row. Oh my gosh, Okay, quite sorry now, And so I think it's it's very obvious that with all the new you know, really pet parents.

I think we can truly call them pet parents at this point when you start seeing those kind of trends and those kind of things going on our country. We have a customer base that ultimately has a dent of the pets in this country go to major retail outlets and online stores to find their pet supplies. We're at the front and in the very very beginning helping educate

them on where they can get quality healthcare. And then remember, every single person that's going to come back and buy a prescription drug at a retailer first is going to

go to a veterinarian's office and have that visit. And so again, we think we're very balanced in providing incremental growth for the manufacturers in that space, for the veterinarians, and ultimately just exp banning the pie and if there's more pets coming home than babies, we're in a very good tailwind as far as the market and the market that's already growing at a six percent KR. Who knows what the potential growth rate could be as we continue

to drive that awareness. I think the estimate is for what about a nine billion dollar market that was in the SEC filing, a nine billion dollar market in for pet medications. Thanks very much for joining us. Cord Christensen is the co founder and the chief executive of pet i q UH. Their stock begins trading. It is trading right now on the New York Stock Exchange. Thanks very much for being with us. And just a note, uh,

Lisa Bramwitz. You know one of the things that you mentioned having to do with the number of pets and so on. As part of their uh filing, they say about seventy of dog owners and seventy seven percent of cat owners view their pets as members of the family. Wow, well, those shares are trading on the NASDAC for I beg your pardon, Yes, yes, but yeah, it's just amazing. All right. Well, let's let's take a look at another story that caught our eye today. Y'alman owner and it is the author

of it. He's a senior writer in banking and finance for Bloomberg News. And it was taken a look at the pretty incredible profits that we have seen at the biggest US banks despite these regulations that have sensibly been holding them back. Yellman, can you just give us a sense of how big these profits have been. Um, they're almost as big as they were in two thousand seven, which is pretty amazing because that was a good year before everything fell apart, as you remember, and it was

less regulated. This is the crucial point, right because a lot of these Dodd Frank regulations had not yet been implemented. It was pretty much unregulated. You can say, I mean they they you know, um, they tried there were people who tried to regulate it. There with this market, they

were told to be hands off. Um. Capital rules were revised, so basically banks could go on without any capital, meaning you don't really need that, could you just borrow as much as you can so um, So their leverage ratios reached you know, one to fifty at times. UM. So there was hardly in the regulation and they were they were making a lot of money and now there's all this regulation they're constantly complaining about and they're making about

the same amount of money. So what does that tell you about their desire to have the chains of regulatory authority loosened? So I mean we have to so no put it in context, you know, as as the banker um that the bank lobbyist told me who's quoted in this story. Well, okay, but the GDP nominal terms is bigger than it was, so the number is not one to one comparison. We're basically got back to the records,

but it's a bigger GDP. Typically, what happens with banks they're lending an activity goes up as GDP goes up nominally. So if GDP grows two percent nominally regardless of realists, real terms, everything in the bank's assets due too, but they haven't. So in a way, we're not where we were in two thousand seven, but we're getting very close.

So we've heard a lot about how certain businesses have become less profitable, talking about debt trading in particular some of their prop trading books, as well as equity trading, which has been losing it's sort of revenue abilities for a while. So what's behind the growth in profits? Um? Well, I mean they have been lending on like so unlike, unlike the common misperception that they have been lending more

and more. I mean, again you make comparisons to before the crisis, lending was growing faster, but then a lot of people will say, god, it was growing too fast, right, there were all the subprime stuff that everybody was borrowing. But but lending is not all the same, right. I mean, when you talk about lending and we're talking about revolving lines of credit and straight corporate loans or are these more complicated structures that could potentially have some serious problems

that have sort of embedded leverage. I mean, are we talking about just the banks doing their function as basically going out there and providing capital to businesses of all sizes and letting them go out and create American dream. They are doing their function, the lending that's helped, and it's And this is interesting because although this is this is something we thought about, what didn't really including in the story. Um the spreads, I mean, the correct credit.

The interest rates are so low, so to be able to actually make decent profits in an in such a horrible interest rate environment is pretty amazing too. But the if you look at net interest margin compared it with now and and pre crisis, the gap isn't that bad. So despite interest rates being so low, banks have managed to keep improved. Recently, they came down because nobody was borrowing for so for several years. Two thousand ten was

really bottom. The interesting margins really went down because when there's no loan demand, you can't charge for it. You know, it doesn't want to what interest people. If there are people are in borrowing, you have to keep it low. But now there's demands more and more, the demand has picked up. People are borrowing, companies are borrowing, and the banks are now notching up that interest rate and they are able to make the spread that they used to

make before the crisis, which is very healthy. So and trading has has bombed up to I mean this this quarter was not a great quarter. Clearly its second quarter. Everything went down because because everything is quiet. We don't like quiet. We want a lot of scare fear, Brexit and and and World War three. Now we don't want that. But but you know, trading force for several quarters really improved. I mean for some banks, five quarters in a row,

they saw massive increases in trading. Morgan Salon was doing great. Um. You know, JP Morgan has just been grabbing market share. UM. US banks are doing great. European banks not so. But that helps the US banks. Yeah, I mean I wonder if you could just briefly just describe the banks paying out interest Let's say on CDs that you're not gonna get anything on in a CD. Right, we're talking maybe one percent at the current rate, not even one, not

even one. Now. I mean I was looking at interest rates the banks paid the other day, and a chart, um, and what happened to them? U um, and there was a study. UM, I forget maybe fed or something over there, I see, But interest rates they pay their depositors is around zero. So that has been and it hasn't picked up even as the FED has picked up in its interest rate, right, So it's not even connected. That's because there's still no alternative. I mean, I talked about lending.

When there's demand for borrowing, you can jack that up. But deposits, you need to jack up the deposit rate when you're competing with others. That is not there because money markets are no longer in the game, so they don't have to. They don't feel like they have dejected out. No pressure for that, No pressure, Thanks very much. Yeah, I'm an owner on as always senior writer banking and finance.

Checkout history at Bloomberg dot com. Well, you know, the Trump administration as well as Bill Schuster, he is a congressman from Pennsylvania, are promoting the idea of turning the air traffic control system into a government well a government authorized private corporation that would be responsible for the air traffic control system in the United States. And here to tell us more about this topic on the airline industry

is an expert Bob Crandall. He is the former chief executive of American Airlines and uh, I want to thank you very much. For joining us. R Crandel, thanks for being I'm glad to be here, all right. So, you know, I was going to give them your long history. You know, you worked at t w A, you were you know, American Airlines and so on. I wonder if you could just start off by framing the conversation about the government's participation in the airline industry, because we used to have

a regulated airline industry and now we don't. Sort of, well, that's right. Then, we used to have regulated industry in the sense that the the c A B control where airlines could fly and how much they could charge. All that went away in uh. The f a A then has the task of establishing safety standards and at the same time as the task of physically operating the air

traffic control system. And what this whole thing is about is that around the world more than fifty countries, almost every other advanced country, in particularly Canada just one north, have taken the actual opera ration of the system out of government and they have put it into what are called a nsps and navigation service providers, which support themselves by charging fees rather than supporting it with taxes as the United States does. It has proven to be a very,

very beneficial change. Those systems are cheaper and they and most importantly, I think tim they make better use of the airspace, which is a limited asset. So this is something that has been under discussion in the United States since Bill Clinton's time. Al Gore was the first advocate of it, and in the meantime, virtually every other country has done it, and I hope we will soon get on and do it. All Right, So if we were to do that, the board that would oversee this new corporation,

those members would be selected by the airlines. Correct, No, no, no, no, no, no, no, they wouldn't. In fact, uh, general aviation would have a seat, Airports would have a seat. Uh, the government would have that. The government would have a seat that the Controllers Union would have a seat. The in the board overall, there's only one of the only one seat is it would be the passenger airlliances, one for cargo airlines. There's one for charter Would they all have to be part of

Airlines for America. That's the sort of umbrella group, right, No, no, the umbrella group is only the passenger airlines to him, So the Airlines for America and the airlines themselves was uh, get one seat on this board and everybody else gets the seat as well, which is which is I think perfectly appropriate. Look, the airlines, because they operate most of the airplanes and most of all big airplanes, will pay

most of the seeds. But the system will be dramatically more efficient, and the consequences that the airlines are willing to take on the task of things. He's because they will be able to operate more lanes to more places with fewer delays. So with this potentially new system for air traffic control, do you believe that the actual service of passenger air aircraft will will improve? Oh? Absolutely, Now not Look, we're not talking about on board service, no, no,

I understand, but just on time start. But we are listening of the delays that occurred last year were caused by congestion in the in the in the air traffic control system. I mean we are still using technologies that there are World War technology. We use radar, for example, instead of GPS to say where planes are. And because we don't use GPS to locate every airplane, airplanes have to remain on the equivalent think of a series of

highways in the sky. And the airplane. Airplanes have to fly down those highways to designated endpoints rather than rather than keeping track of where every airplane is all the time, which is both way more efficient and at the same time safer. So the consequences if you could use all of the air space in an optimal sort of way, there would be fewer delays, and you could have more flights,

and they could go to more places more often. It's and and the real big impact of this PIM is that this is going to have a dramatically beneficial impact on the US economy. As you know, traveling tourism is a big employer. If if airplanes can fly more more flights and they if they can incur fewer delays, more people are going to travel, More people are gonna stay in hotels, eating restaurants, etcetera, etcetera, etcetera. So I think this is going to be a big stimulant to the

to the U. S economy. And again it's something we ought to get on with and get done. All right, So, Bob, I want you to turn your attention now to what goes on in the plane as far as customer service is concerned, and also the what goes on in the airports. For that, You've obviously seen many of the recent stories and watched maybe perhaps the videos of the treatment of various passengers. What goes through your mind when you see that and you hear these stories? Where where are the

people in charge of the actual airlines? Why they're not walking around like someone would walk around in office and see how things are doing well? Keam You know, Look, I I spent a long time in the industry and at one company that I was particularly fond of, And the reality is, when I see stories like that, I'm outraged.

Obviously they should not happen because you were I know that you were famous for Actually you would walk through terminals and you would take the actual planes on a regular basis, and you would make comments, and you would talk to actual passengers. Yes, absolutely, and I talked to spend a lot of time talking to employees. And in fact, I think if if more of the people who run the airlines they did more of that, I think there

would be fewer of those awful incidents. But let me let me say this by way of mitigation and explanation, I guess what we've got today is an overcrowded system. Our airports are out of date. Our air traffic control system is out of date, which we've been talking about the consequences. As demand grows, the airports get more and more crowded, the airplanes get more and more crowded, and all that crowding and confusion is very unpleasant. Now the problem,

here's the problem. We used to have less crowding and less confusion, and we used to have more regulation. And as deregulation has occurred, people that the traveling public generally has said, look, I am going to select the cheapest flight. That is generally what I'm going to choose. That's the way I'm going to choose. And the consequence of that is that the amount of money available to accommodate passengers in a in a non crowded environment, in a more

pleasant way is very limited. So I I look, I'm not happy with the state of the hill and service industry service and I don't think people in the industry are either. On the other hand, if you look at the number of people carried and the tremendous safety of the organization, I think you say, well, they're not doing as well as i'd like them to do in terms of service, but they're doing a pretty down good job of keeping people safe. Well. Thanks very much for giving

us a good picture of the airline industry. Bob Crandall is the former chief executive of American Airlines. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm Pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa abramowits one before the podcast. You can always catch us worldwide on Brook Radio. H